301

O.D.M Computer & Mgt.
Education
BUSINESS POLICY & STRAEGIC ANALYSIS (CP-301)
Ques 1:- What is Business Policy? How does Business Policy make the Study of
Management more meaningful?
Ans:- Business Policy:-
The term Business Policy may be used interchangeably
with Strategic Management, corporate planning etc.
Primarily the term Business Policy means a long-term planning for the total business –
“as a whole”.
BUSINESS- Corporate/ Overall functioning
POLICY – Planning/ Formulation of Strategies

Thus Business policy means a long-term planning of any Organization for the
purpose of its -
GROWTH
SURVIVAL
EXPANSION
DIVERSIFICATION ETC.
The planning of the overall Business is done by the top-level managers who have the
relevant skills experience and knowledge to take a strategic decision for the overall
corporate.
Acc to Christensen:-
“Business Policy is the study of the functions and
responsibilities of Senior Management, the crucial problems that affect success in the
total enterprise, and the decision that determine the direction of the Organization and
shape its future.”
From the above definition it may be understood that Business Policy attempts to study
what path is the Organization going to take in future.
-------------GAP-------------------------
Actual Position Anticipated Position
Planning Designing Implementing Steps

O.D.M Computer & Mgt. Education
Study of Business Policy
• Nature of Business Policy:-
1. Business Policy is a Study:-

It is a study of a what the top level
Managers do and what guides their activities.
2. Top-Management:-
Business Policy deals with the long term perspective of the
Organization. These decision are taken by the managers at the senior level of
management. Therefore, Business Policy attempts to Study the functions and
responsibilities of the senior management which primarily concerns itself to the crucial
problems or decisions of the organization.
3. Future –Oriented:-
As the Study of Business Policy entails what should be done
to take a desired future course of position it is future-oriented. The Senior level
managers anticipate and predict the future and take a policy decision in the present.
4. Choice of a Position:-
The study of a Business Policy involves evaluating
Various courses of action and various desired future positions and ultimately choosing
one of the best suitable future position.
Leader
Follower
Choice of a position
Challenger
Initiator
5. Choice of a Strategy:
It also involves an evaluation and choice of a
Strategy to reach upto the desired future position.
Mergers & Acquisitions

Joint Ventures
Choice of a Strategy
Diversification
Integration
6. Mobilization of Resources:-
The study of Business Policy is also concerned with the optimum and
mobilization of the available and the required resources in an organisatio9n for the
achievement of the :
Organizational Goals
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Short-term Goals Long-term Goals
• Evaluation of Business Policy:-
Future
Strategic thinking
1980’s
Strategic Management
1960’s
Strategy Paradigm
1930-40’s
Planned Policy formulation – Integration areas
Mid 1930’s
Ad-hoc Policy-making
1911
Hartvard Business School introduced an

integrative Course in Management.
In the Initial days managers used to do with day to day planning methods. The first
phase in mid 1930’s was the premise of ad-hoc policy-making mainly due to the
nature of the business of that period.
The second phase in 1930’s and 1940’s was marked by the increasing environmental
changes. Planned Policy formulation replaced ad-hoc policy making, which led to the
emphasis shift to the integration of functional areas.
The third phase during 1960’s was based on strategy paradigm. It was the effect and
relationship of the business with the environment, which guided the process of policy
making.
In the early eighties, the patterns changed again companies went global and
competition increased Japanese Companies unleashed a force across the world
along with other Asian companies and possed threats for the U.S. and European
Companies.
Strategic Management
Strategic process of business Responsibilities of General management
• Importance
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The study of Business Policy makes the study of mana-

gement more meaningful. It completes the study of management for the students, as
it puts together the information of all the functional areas and gives a complete picture
of the organization for determining a comprehensive future policy of an organization.
Thus the Business policy is important for
Students Executives
For Students:-
a) Business Policy seeks to integrate the knowledge gained in various functional

areas of management i.e. Finance, Production, Marketing, and Human Relations
etc.
b) All the constraints and complexities of the real life business are studied in the
subject of Business Policy.
c) The study & practice of management becomes more meaning with the integration
of all the functional sub-systems.
For Executives:-
d) Business Policy helps to create an understanding of how policies are formulated

e) The study makes the executives more receptive to the developments in the
environment to pick ideas and suggestion for implementation purpose.
f) Business Policy prepares the executives at middle-level of management for the
understanding of strategic decision – making.
g) It offers a unique perspective to executives to understand the senior
management’s viewpoint.
CONCLUSIONS:-
The purpose of the business policy course is to integrate the knowledge gained in
various functional areas, to adopt a generalist approach and to comprehend the
complex interaction taking place within the organization. It is a core subject that
integrates all the knowledge & experience gained for future of the organization.
Example-1 The study of the planning & activation of a joint venture between ONGC
Mittal Energy (OME) and ONGC Videsh (OVL) as Mittal Steel Group is a strategic
decision.
Example-2 The kolkata based – ITC, known primarily for its tobacco products has
taken a strategic decision to enter into Soaps by targeting SEC-A consumers using
products in the Rs. 15/- range.
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Ques. 2:- Differentiate between Vision and a ‘Mission’ Mention the

characteristics of a good mission statement.
Ans:- VISION:- The promoters of an organization, normally have some aspirations
which guide them in the structuring and functioning of the organization. These
aspirations are expressed in strategic intent means intention. A strategic intent should
lead to on end. That end is the Vision of an organization. It is what the firm or person
would ultimately like to become in the future.
A vision is more dreamt of than it is articulated. Many a times it may not be evident
what vision does the top management holds for its organization. A vision could be as
hazy & vague as a dream. Yet it is a powerful motivator to action.
Acc to Kotler:- “Vision is a description of something in the future.”
Acc to El-Namaki:- “Vision is a mental perception of the mind of environment on
individual, or an organization that aspires to creat within a broad time horizon and the
underlying conditions for the actualization of this perception.
This vision is a future aspiration that leads to an inspiration to be the best in one’s
field of action. It acts as a strong motivating factor for the senior level managers as it
provides a direction to the organizational efforts.
• Benefits of a VISION:-
Acc to Parikh:-
1. Good visions are inspiring.
2. Visions represent a discontinuity and shows the company what is to be achieved
as an ultimate position.
3. Good visions helps in the certain of a common identity and a shared sense of
purpose.
4. Good visions are competitive, original and unique. They give a sense of identity to
all the employees in an organization.
5. Visions foster long-term thinking and guides the organizational working towards a
common philosophy.
6. A Vision represent integrity and may be useful for the benefit of people.
Thus a good Visions may be inspiring & motivating to the management. It may guide
the working of a dream i. e. a Vision. A vision articulates the position that a firm would
like to attain in the distant future.
E.g. :-
IOC’s Vision
“Indian Oil aims to achieve international standards of excellence in all aspects
of energy an diversified business with focus on customer delight through quality
products and services.”
Thus Vision constitutes future aspirations that lead to an inspiration to be the
best in one’s field of activity.
Mission: A mission is a statement which defines the role that an organization plaus
in a society. It is the link that the organization develops between its existence and the
need of the society.
While the essence of a vision is forward-looking view of what an organization
wishes to become Mission is what an organization is and why it exists.
According to Thomson.
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“Mission is the essential purpose of the organization concerning particularly why it is in

existence, the nature of the business it is in an the customers it seeks to serve and
satisfy.”
According to Hunger:-
Mission is the purpose or reason for the organizations existence.
Formally Mission Statement of the
reason of existence
Formulated
Dream to be achieved
Informally Vision in future
* CHARACTERISTICS OF A MISSION STATEMENT:
1. Feasible:-
A mission statement should always aim high should not be an impossible statement.
It should be realistic and achievable.
According to Havell’s:
VISION:- “We are committed to the cause of enriching the quality of life by ensuring
safe, efficient and convenient use of electricity.”
MISSION: ” Better Technology
Better Quality
Better Tomorrow”
CONCLUSION:-
Therefore from the above discussion it may be concluded that a vision is a future
dream of the promoters of an organization. Based on this foundation, the top
management designs a statement for the very reason of its existence in the society,
which is called Mission. The two terms are different in concept yet they complement each
other in giving a purpose to the existence of an organization and guides its activities
towards a future position.
Strategic Intent
Vision
Mission
Business (Corporate level)
Objectives
Divisional Objectives
Departmental/ Functional
Objectives
Operational Objectives
Q.3:- What is the concept of Environment in Strategic Management? What aspects

does Environmental Appraisal deal with?
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Ans:- Environment: The term basically means the surroundings: external

objectives, variables, events and circumstances under which someone or something
exists. In terms of Business, Environment refers to the culmination of all conditions,
events, circumstances and situations and the various pressures and influences and
surround and directly and indirectly affects the organization.
Circumstances
Influences
Environment Situation
Conditions
Pressure
Directly
Environmental
Influence on
organization Indirectly
*Characteristics of Environment:-
a) Complex: The environment consists of a number of factors and variables directly or indirectly
influencing the operations of any business organization. All the factors and conditions which form
a part of the environment are interrelated and interdependent. One factor influences or get
influenced by another factor. Thus environment is a very complex phenomenon whose parts may
be easily understood in isolation but a total picture may require sufficient understanding and
knowledge.
Globalisation
Liberalisation
Technological
advancement
Competition
Infrastructure
development
Environment sub-systems
b) Dynamic:
Due to so many forces operating in the environment the nature of environment is
constantly changing and is thus dynamic in nature.
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c) Multi-Faceted:
The character of the environment is understood by the person who is observing it.
It has got many angles. It ultimately depends upon the perception of the observer, what
he derives out of the development of the events. For example the de-licensing of the
industries may be considered as an opportunity by some who want to enter the business.
However the same may be considered as a threat by those who were earlier having a
monopoly in a particular business.
d) Far-reaching impact:
The developments and events shaping the environment have a far reaching
influence on the operations of a business. For example any change in the tastes & linking
of customers affect the growth & profitability of a firm.
For any business organization the study of environment is of utmost important to
be able to adjust itself to the latest developments and to be able to reap the benefits of
the opportunities arising in the market. The complexities of any environment may be
understood by dividing it into different categories.
Environment
Internal Vs. External General Vs. Relevant
A) INTERNAL ENVIRONMENT:
The internal environment of a business consists of various factors existing within
an organization which results into building its strengths & weaknesses.
It includes:-
Employees & their skill base.
Level of Technology available
Availability of various resources like finance, infrastructure etc.
Process
Organizational design and structure
Organizational work culture- Procedures – policies.
B) EXTERNAL ENVIRONMENT: -
The external environment of a business includes all the factors outside the organization.
It is this set of factors which provide an opportunity or pose threats to the organization. It
includes
i) Market Environment: Customers needs, preferences, attitudes, perception,
bargaining & purchasing power, satisfaction etc.
Product: features, functions, ingredients, image, price, differentiation, availability,
substitutes, services etc.
Marketing intermediary: Channel, levels, costs, logistics, delivery, service & financial
schemes etc.
Competitor related factors: types & number of competitors, entry & exit of competitors,
nature & strategy of competition.
ii) Technological Environment:
Sources of technology, cost of technology acquisition,
Technological development, stages of development change & rate of change, research &
development.
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Impact of technology on human beings and environmental effort.

Communication & infrastructural technology.
iii) Supplier Environment:-
Cost, availability & continuity of supply of raw materials, parts & components.
Cost & availability of finance, energy, human resources, machinery, spare parts & after
sales service.
Infrastructural support & ease of availability.
Bargaining power of suppliers & existence of substitutes.
iv) Economic Environment:-

Stage of economic development of the country.
Structure of economy- Capitalist/Socialist/Mixed
Economic policies- industrial, monetary & fiscal
Economic planning
Economic indicates like national income, GNP per capita income, savings & investment.
Balance of payments, value of exports & investment.
v) Regulatory Environment:- Constitutional framework, Directive principles,
fundamental rights, division of powers.
Policies related to licensing, monopoly, foreign investment, financing etc.
Policies related to distribution & pricing
Policies related to imports & exports
Other policies related to the public sector, small scale industries, environmental pollution,
consumer protection etc.
vi) Political Environment: The political system and its features, political parties.
The political structure
Political processes like party system, elections, economic & industrial promotion &
regulation.
Political philosophy, governments role in business etc.
vii) Socio-cultural Environment:- Demographic characteristics e.g. Population and its
density, distribution, change, age composition, interstate, migration, rural-urban mobility
& income distribution.
Environmental pollution, consumerism, corruption, use of mass media etc.
Family, family values & family structure.
Role and position of men, women, children etc.
Educational level, work ethics, role of minority etc.
viii) International environment:-
Globalisation, global blocks
Global HR, Global information system
Global markets & competitiveness
Global legal system
C) General Environment:-
A wider perception of the environment includes all the aspects of the external
environment e.g.
National/ international
Economic
Social/ Demographic
Technological
Political etc. together constitute the general environment. The general environment
affects the business someway or the other and thus all business houses are concerned
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about it. The general environment offers a common set of opportunities and poses a
common set of threats to all the players in the industry. However, the organization may
not be influenced by each factor of the general environment.
D) Relevant Environment:-
Every business organization is concerned with a set of environment aspects, which have
a direct, or an immediate affect on the business. This part of the general environment
which is of an immediate concern to the business is termed as Relevant environment.
What constitutes a relevant envornment depends upon the perception & working of the
business and the industry a firm is in.
PORTER’S FIVE FORCES MODEL OF EXTERNAL ENVIRONMENT
Potential Entrants
Relative power of Unions Threat of New Entrants
and Government etc.
Other Buyers
Stockholders Industry
Competitors Bargaining power of
suppliers
Suppliers
Bargaining power ofRivalry among existing firms
buyers Threat of substitute
Products or services
Substitutes
According to Michael Porter:
“Competitive strategy must grow out of a sophisticated understanding of the rules of
competition that determine an industry’s attractiveness.”
CONCLUSION:-
Thus the study of various aspects of the environment is undertaken by the
strategist in order to determine positive & negative trends that could impact upon
organizational performance. Change is a continuous phenomenon in the external
environment and that change is unpredictable from the perspectives of timing & strength.
A manager’s ability to recognize and anticipate environmental changes plays a key role
in shaping the company’s future. Understanding of the external environment helps to
build the company’s base of knowledge and information, which can help improve a
company’s competitive position, buffer the company from environmental impacts & build
bridges to influence stakeholders of the company. This will improve the company’s
opportunities to successfully adopt its strategic direction to the trend of the environment.
Q.4.: Define SWOT. What is the rationale of performing SWOT?

Ans: SWOT:
Any Business organization for its survival and growth undertakes a detailed SWOT
analysis. SWOT is the shortform for
Strength
Weaknesses
Opportunities &
Threats
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In the cut-throat competition faced by the business today a detailed environmental

scanning is a must. The study of Internal & External Environment, General & Relevant
environment makes a business house adopt itself to the ever changing and ever
demanding surroundings in which the business operates.
S W O T
Internal External
Environment Environment
The strengths & Weaknesses of any organization are inherent and reside in the
internal environment of a business.
The Opportunities & Threats are the development or events which exist in the
external environment and are open to all the players in the industry.
a) Strengths:
A strength of a business is its capacity or ability to perform or to possess any
resource relevant for the success or otherwise of a firm, which may not be possessed by
a rival player in the industry.
For e.g.
Skilled manpower
Level of technology
Economy of Scales or availability of cheap finance
Intense distribution channels
Raw materials/ components at least cost.
Efficient suppliers etc.
The strengths possessed by a firm gives it a strategic advantage over the other
firms either in the short run or in the long run business can take a risk based on one of its
strengths. This strength, if realized can help strategic planning of a firm.
b) Weaknesses:
A weakness of a business is its shortcoming or unability to do something or to
possess something which a rival firm may have. This weakness determines the level of
strategic advantage gained by a competitive firm over a business. A weakness could be
poor availability or poor retention of skilled manpower.
High cost of capital
Outdated or expensive technology
High cost of production
Unreliable suppliers.
Shallow distribution channels
Poor state of logistics & physical distribution
Every organization should try to further strengthen its abilities and try to overcome
or hide or compensate its weaknesses. These weaknesses or shortcoming are generally
made known to the customers by competitors. The firm should always have a ready
strength available to be able to compensate any or all of its weaknesses in the eyes or
the customers.
For example:
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Weakness of high cost of production may be justified by unique features, high

quality & durability etc. of the product.
c) Opportunities:
An opportunity is any chance or an event, which can be utilized and taken

advantage of an opportunity, lies in the external environment and is open to all the
players in the industry serving on the same platform. It primarily depends upon the
perception as well as the resources of the organization that, whether any occurrence is
considered as an opportunity or not. An effective manager is always receptive to
opportunities, which may soon be converted into strengths.
An opportunity may be :-
Some favourable law passed by the legislature of the country
Entry or exit of a competitor a substitute
Change of the consumer behaviour
Change in the technology compatible to organisational resources
Availability of a cheap finance
Possibility of a joint ventures or takes over
Change in the competitor’s strategy
Change of a political party in power etc.
Thus if any event or an occurrence is in favour of the organization it is perceived to
be an opportunity by it. Opportunities are taken advantage of to create a competitive
edge or a first mover’s advantage in the industry.
d) Threats
Threats exists in the external environment. It is in accordance of an event or the
potential occurrence of an event which may adversely affect the organisation’s
functioning or potentiality to lead over the competitors in today’s time or in future. The
above mentioned opportunities may well act as a threat to an organization
If it is not suiting its style or working, resources or business strategy.
It is very significant for any business organization to do its SWOT analysis on a
regular interval to make use of its strength & opportunities, to overcome its weaknesses
and to avoid the threats in hampering its business.
Implementation
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Formulation
Program
THE BUSINESS STRATEGIC-PLANNING PROCESS

Formulation
Strategic
Feedback & Control

Formulation
Goal
Environment
Environment
Analysis
SWOT
External
Internal
Business
Mission
Indicators of competitive strengths

1. Strong market share
2. Growing customer base and customer loyalty.
3. Above average market visibility
4. Strongly differentiated products
5. Cost advantages
6. Above average profit margins
7. A creative & entrepreneurial alert management
8. Above average technological & innovational capability
Indicators of Competitive Weaknesses
1. Competitive disadvantages
2. Short on financial resources
3. Slipping reputation with customers
4. Lag in new product development
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5. High cost of production

6. Weak product quality
7. Losing ground to rival companies
8. Lacking skills & capabilities in key areas
CONCLUSION:
A Successful strategist concentrates his efforts on the understanding of both
external as well as the internal analysis. The knowledge of competitive moves and
counter moves and the recognition of the potential competitive advantages of the
organization. Both are equality important to be realized by a Strategist.
Q.5. Differentiate between BCG and GE matrix tools used for Strategic planning.
Ans:- BCG GROWTH- SHARE MATRIX:
The Boston Consulting Group (BCG) a leading management-consulting firm
developed and popularized a growth share matrix. The matrix comprises of four
quadrants each describing the size and position of the strategic business unit owned by
an organization.
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Stars Question Marks

Market
Growth
Rate
Cash Cow Dogs
L H
Relative Market Share
Growth
On the vertical axis is the Market Growth rate of the market in which the business
operates. A market growth rate above 10 percent is considered to be high.
On the horizontal axis is the Relative Market Share. It refers to the Strategic
Business Unit’s market share as compared to the firm, which is its largest competitor in
the segment under consideration. The relative market share serves a measure of the
company’s strength in the market segment.
The two axis are divided into high & low. The growth matrix is divided into four
cells each indicating a different type of business profile.
1. Question marks:These are Businesses that operate in high- growth markets but
have low relative market shares. A question mark requires a lot of cash because the
company has to spend money on plant, equipment and personnel to keep up with the
fast growing market and because it wants to overtake the market leader. The company
has to think hard about whether to keep on investing money into this business or put an end.
2. Stars: It is a market leader in a high growth market. A star does not necessarily
produce a positive cash flow for the company. The company must spend substantial
funds to keep up with the high market growth an to fight off competitor attacks. A star is a
potential business which has the competitive advantage to be a market leader in an
industry that is growing fast.
3. Cash cows: Stars with a falling growth rate that still have the largest relative
market share and produce a lot of cash for the company is called a cash cow. The
company does not have to finance expansion because the markets growth rate has
slowed because the business is the market leader it enjoys economies of scale and
higher profit margins. The company uses its cash cows to pay bills and support other
business.
4. Dogs
Businesses that have weak market shares in low-growth markets are in the dog
category. The company should consider whether they are expecting a turn around in the
market growth rate or a new chance for market leadership else they should divest this
business. It would be fruitless to spend and money on this matrix business.
G-E MATRIX
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A refined version of the BCG Matrix is the one pioneered by General Electric. An
SBU’s appropriate objectives cannot be determined solely by its position I the growth
share matrix. If additional factors are considered the growth-share matrix can be seen as
a special case of multifactor portfolio matrix.
High
Protect position Invest to build Build

Selectivity
Market Attractiveness
Medium
Build Selectively Manage for Limited
Earnings Expansion or
Harves
Low Protect & Manage for Divest

Refocus earning
Strong Medium Weak

Business Strength
Market attractiveness – Competitive - Position Portfolio
Each business is rated in terms of two major dimensions – market attractiveness and
business strength. Companies are successful to the extent that they enter attractive
markets and posses the required business strengths to succeed in the markets. If one of
these fact is missing the business will not produce outstanding results. Neither a strong
company operating in an attractive market will do very well.
To measure the two dimensions, strategic planners must identify the factors underlying
each dimension and find a way to measure them and combine them.
Market attractiveness varies with the market’s size, annual market growth rate,
historical profit margins etc. business strength varies with the company’s market share,
share of growth, product, quality etc.
While the BCG matrix considers only two factors, the GE portfolio matrix helps the
strategic planners to look at more factors in evaluating an actual or potential business
than the BCG model does.
As against the BCG matrix the GE matrix is divided into nine cells, which in turn
falls into zones.
High
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Market Attractiveness
Medium
Low
Business Strength
The three cells in the upper left corner indicates strong SBU’s in which the company
should invest or grow. The diagonal cells stretching from the lower left to the upper right
indicate SBU’s that are medium in overall attractiveness.
The company should pursue selectively and manage for earnings. The three cells
in the lower-right corner indicate SBU’s that are low in overall attractiveness. The
company should give serious thought to harvesting or divesting these business units.
Apart from the BCG and GE portfolio matrix, three more portfolio matrix are used to
evaluate the strength of business units and facilitate strategic planning.
A) Direction Policy
B) Space Matrix
CONCLUSION:
Portfolio models have helped managers to think more strategically, to understand
the economics of their businesses better, improve the quality of their plans, improve
communication between business and corporate management, eliminate weaker
businesses & strengthen their investment in more promising businesses.
However, portfolio models must be used cautiously. They may lead the company
to place too much emphasis on market-share growth and entry into high growth
businesses or to neglect its current businesses because may end up in the same cell
position though differ greatly in underlying ratings & weights.
Q.6. : “The core of general management is Strategy” Elaborate. Also discuss the
role that a strategist play in strategic management.
Ans: STRATEGY:
THE concept of Strategy is central to understanding Business Policy and Strategic
Management. The term ‘Strategy’ is derived from the Greek word ‘Strategos’ which
means generalship. The term Strategy means the art of the managing or adopting a
course of action. A course of action may be:
- to take advantage of opportunities
- to devise ways to counter threats etc.
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ACCORDING TO ALFRED D. CHANDLER (1962)

“A Strategy is the determination of the basic long- term goals and objectives of an
enterprise and the adoption of the courses of action and the allocation of resources
necessary for carrying out these goals.”
ACCORDING TO WILLIAM F.GLUECK (1972)

“A Strategy is a unified, comprehensive and integrated plan designed to assure that the
basic objectives of the enterprise are achieved.”
By combining the above definitions we understand that a Strategy is a plan or
course of action or a set of decision rules forming a pattern or creating a common thread
related to the organizations’ activities which are derived from its policies, objectives and
goals.
In business the strategy operates at different levels.
Corporate Level
Strategy Corporate
Office
Business Level
Strategy
SBU 1 SBU 2 SBU 3

Functional Level
Strategy
Production Operations Marketing Finance Personnel
Apart from the three levels mentioned, many a times a strategy may be designed
at higher levels. Such strategies may be called the Societal Strategies.
The strategies may be set at levels lower than the functional level, which are
called Operational Strategies.
“The stream of decisions and actions which leads to the development of a an
effective strategy or strategies to help achieve corporate objectives.”
-Glueck (1984)
Strategy is the most significant concept in Business policy and Strategic Management. It
guides the functional and operational decisions by defining the broad course of action.
For example, for an old and very well established company, which had been the
market leader for several years, suddenly faces threat from the emergence of
competitors has e.g. Bajaj Scooters faced competition from LML scooters. A course of
action may involve strategies like expansion diversification, focus, turn around, stability or
divestment phases in the Strategic Management.
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Establishment Formulation of Implementation Strategic

of Strategic Strategies of Strategies Evaluation
intent
Strategic Control
Role of strategists:
Strategists are individuals or groups who are primarily involved in the formulation,
implementation and evaluation of strategy. For different levels of managers and
sometimes even outside experts are involved.
a) Board of Directors:
The Board of Directors are the ultimate legal authority which is elected by the
owners of the organization. The board is responsible for providing guidance and
establishing the directives. There may be difference between the role played by the
Boards of different Organisations.
The board activities include:

To direct
Discuss matters of technology collaboration
New product development
Senior management appointments
Reviewing and screening executive decisions
Setting and accomplishing objectives
Reviewing and evaluating organisational performance
b) Chief Executive Officer:-

A CEO may be designated as the Managing Director, Executive Director,
President or General Manager. He is chief Strategist and plays a major role in decision-
making. He is responsible for-
Execution of functions of strategic importance
Setting the mission, objectives & goals of the organization
Organisational leader, Organiser, Implementer, Coordinator and controller.
c) Role of Entrepreneurs:-
An Entrepreneur is the person who starts a new business and has a high level of
“achievement-motivation”. Since the entrepreneurs are the initiators and owners they
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provide a sense of direction to the organization and set objectives and formulates
strategies to achieve them. An entrepreneur usually play all strategic roles
simultaneously.
d) Senior Management:-
The Senior Management consists of managers at the highest level of the
managerial hierarchy. Managers at the senior level may serve the Board of Directors on
rotational basis, may be as a part of executive committees formed to deal with new
project.
They look after:

Modernization
Technology upgradation
Diversification & expansion
Plan implementation & communication
New product development
Assisting the board & the CEO in the formulation, implementation &
evaluation of strategy.
e) Consultants:-
There may be Organisations, which do not have corporate planning department
because of small size, infrequent requirements, financial constraints etc. Such
organisations hire external consultants for strategic planning they may be.
Individuals
Academicians
Consultancy companies etc.
They provide professional service by specially trained & experienced persons to
advise and assist managers & administrators to improve their performance &
effectiveness of their Organisations. e.g. A.F.Ferguson, McKinsey & Co.
Conclusion:
Thus there are various parties involved in the strategy Formulation, Implementation &
evaluation. Strategies give a direction to the company. They coordinate the efforts of all
functions & all levels towards a predetermined common organisational purpose. It
facilitates an optimum resource allocation & helps programming all organisational
activities in advance.
Q.7. What are the different types of Strategies under Corporate- level Strategies (a)
Stability (b) Expansion (c) Retrenchment (d) Combination. Discuss its advantages
& disadvantages.
Ans: CORPORATE – LEVEL STRATEGY:-
Corporate level strategies are basically about choice of direction that a firm adopts
in order to achieve its objectives. These strategies guide decision – making related to
allocating resources among the different businesses of a firm, transferring resources from
one set of business to others and managing & nurturing a portfolio of businesses in such
a way that the overall corporate objectives are achieved.
There are different types of grand strategies.
20
I) STABILITY STRATEGY
It is a strategy, which aims at an incremental improvement of its functional
performance. It may aim at marginally changing any one aspect of the business:-
Customer segment
Alternative Technology
Product mix etc.
A stability strategy is adopted because
It is less risky
Environment faced is relatively unstable.
Expansion may not be suitable.
There may be three types of stability strategies.
No-change
Strategy
Proceed with
caution/pause
strategy
Profit strategy
a) No-change Strategy:-
It involves a conclusions decision to do nothing new and to continue with the
present business.
b) Profit Strategy:
There may be a situation when the firm tries to sustain its profitability by reducing
investments, cutting costs, raising prices, increasing productivity etc.
c) Pause Strategy:-
It is a strategy to give a pause to the blasting expansion strategy in the past or toe
move cautiously before moving into a new business aspect.
DISADVANTAGES OF STABILITY STRATEGY
- Acts as a testing ground, before entering into a new venture

- Gives a period of rest if the company had been pursuing aggressive expansion.
- Suitable when any expansion may be threatening
II EXPANSIONS STRATEGY:
THIS strategy aims at high growth by substantially broadening the scope of one or
more of its businesses. It aims at the improvement of its overall performance in business.
There may be five types of Expansion Strategies.
Cooperation Concentration
Integration
Internationalisation
21 Diversification
a) Expansion through concentration:-

It is also called as intensification, focus or specialization strategy. It involves
concentration of resources on one or more of a firm business so that it leads to
expansion
b) Expansion through Integration:

Integration means combining activities related to present activity of a firm. It is an
expansion strategy which involves integrating to any business activity in the value chain
ahead or backwards existing business of an organisation.
Potato Chips Distribution
Backward Integration Existing business Forward Integration
c) Expansion through diversification:-

Diversification involves a substantial change in the business of the organisation.
Concrete Diversification:- When the new activity is related to existing business activity.
Marketing Technology Marketing &

Related Related Technology
related
Conglomerate diversification: A strategy that plans to enter into an unrelated business
activity for eg. Godrej locks/Almirahs/Referigerators/Soaps.
d) Expansion through Cooperation:-

it is a strategy which works on the possibility of mutual cooperation with
competitors; with the competition also going at the same time.
Mergers:-
It is a strategy of two or more organisation in which one acquires the assets and liabilities
of the other in exchange of share or cash.
Conglomerate mergers
Horizontal mergers (2 unrelated firms)
(2 firms in same business)
Concentric mergers
Vertical mergers (2 related firms)
(2 firms creating
complementary products)
Takeover:-
It is a strategy where an attempt is made by one firm to acquire ownership or
control over another firm against the wishes of the latter’s management.
22
Joint venture:-
It is a strategy where two or more companies combine to form a new company in
order to make use of the strengths of the partners to gain access to a new business. Eg.
Maruti-Suzuki.
Strategic alliance:-
Two or more firms unite to pursue a set of agreed upon goals but remain independent
subsequent to the formation of the alliance.
e) Expansion through Internationalisation:-

These are the types of expansion strategies that require firms to market their
products beyond the national market.
High
Global Transnational
Cost Pressures Strategy Strategy
International Multidomestic
Low Strategy Strategy
Low High
Pressure for local Responsiveness

III RETRENCHMENT STRATEGY
Retrenchment strategy is followed when organisation aims at a contraction of the
scope of business. It may involve a total or partial withdrawal from an existing business. A
firm may adopt this strategy when faced with adverse external environment eg. Shrinking
market share, diminishing profitability, falling sales, emergence of substitute products,
adverse government policies, tougher competition, changing customer need &
preferences etc.
It involves strategies like.
a) Turnaround Strategies:-
It means devising a strategy to reversing the trend, negatively affecting the
organisation. The strategy implemented internally focus on the ways and means of
reversing the process of decline.
b) Divestment:-
It is a strategy which cuts-off the loss- making units or divisions, a product list or
any of its decline causing function etc. it involves a sale of a portion of business. It is
adopted in case a turn-around strategy is not successful.
c) Liquidation:- It is a strategy adopted to abandon all its activities completely.
It involves closing down a firm and setting its assets. It is considered to be the last resort
for any strategist as it involves both loss to employees as well as to the organisation.
Advantages of Retrenchment strategy
23
To move out of loss-making business.

To meet threatening environment (Government/ competitor/ Substitutes/ Economy/
Customers needs & preferences).
Supports profitable businesses by reallocation of resources.
Saves managements efforts by cutting off unprofitable business.
Disadvantages
May be used a short –cut to putting hard work
May divest a potentially profitable business.
May be the decline is temporary.
IV COMBINATION STRATEGIES:- It is strategy adopted by an organisation as a mixture
of Stability, Expansion & Retrenchment either at the same time in its different businesses or at
different times in the same business with the aim of improving its performance. In practice it is
very difficult to find any organisation that has run its business on a single strategy.
Simultaneous
Sequential Simultaneous &

Sequential
Advantage of Combination Strategy
Big organisation facing complex environment cannot run a single strategy.
An organisation has different business.
Each business lies in different industry requiring a different response.
CONCLUSION:-
Thus, the above discussion shows that there exists various strategic alternatives before a
strategist. Depending on the
- Type and nature of business
- Growth & future of business
- Nature and number of competitors
- External environmental variables
- Overall philosophy of the top-management
- Internal strengths & weaknesses etc; a given strategy or a combination is adopted
**********************************************************************************************
Q.8: Distinguish between the different approaches in Decision – Making.

Ans : DECISION MAKING:
The process of decision – making is a very complex and an important function. It
involves considering various alternatives to reach to a choice of an alternative which
facilitates the accomplishment of the organisational objective. Strategy formulation
involves a choice amongst alternatives. It is the most important task of the senior
management to take decision on strategic issue.
Decision-making is of two types
24
Conventional Decision-Making Strategic Decision-making

Objective Setting More complex & varied decisions
Identification alternatives Extremely difficult choice
Evaluation of alternatives Responsibility of the Senior level management
Choosing the best alternative Important issues
Routine decisions Long term impact.
Middle & lower levels of management
Rationality
Variability
Creativity
Factors in
Decision making
Individual Vs. Group
Person Related factor decision-making
APPROACHES TO DECISIONS- MAKING

a) Rational approach:- The rational approach to decision-making involves an
intensive effort in all the steps:-
Identification of Problem
Diagnosis of the problem

(Simon)
Identification of various alternatives Bounded
Rationality
Evaluation of alternatives
Choice of an alternative
Implementation of decision
Review & control
This approach holds that all the steps involve an effort to reach to a quality decision.
Extensive information Search and a logical analysis is done by a decision – making
function.
However such an approach undermines personal & the psychological factors
which play an important role in the process of decision-making. Not all managers may be
able to collect, consider & analysis the details & the information.
b) Human Approach:-
The Human approach of Decision – Making maintains that the human factors
plays a significant role in decision – making. Not all decisions may be made rationally. A
personal touch, emotional analysis and psychological factors like perception; motivation
& attitude etc. may affect the process of Decision- making.
c) Combination:-
25
The third approach to decision- making is a combination of the two approaches

mentioned above.
Human Rational
Approach Approach
Combination Approach
This approach states that practically decisions are not completely rational or
completely emotional. These are taken in combination of the two. A Strategist tries to
take a decision based on an extensive research however he may have some personal
factors affecting his choice of an alternative. Thus it’s the combination, which is the most
practical approach of decision-making.
**********************************************************************************************
Q 9. Discuss the Techniques used for Operational Control.

Ans:- Operational Control:-
Operational control is aimed at the allocation and use of organisational resources
through an evaluation of the performance of the organisational units an to assess their
contribution to the achievement of organisational objectives.
Concerned with actual results or performance
Control
Strategic Control Operational Control

Strategic Control
Proactive
Continuous questioning of the basic direction of strategy
Focus on external environment
26
Operational Control
Reactive
Allocation & use of organisation resources
Focus on internal environment
Process of Operational Control
Strategy / Setting Actual Measurement

Plan standards of performance of actual
objectives performance performance
Reformulate Check Analysing

Check standards
Strategy/plan performance Variance
Feedback
TECHNIQUES FOR OPERATIONAL CONTROL
The techniques for Operational control are based on organisatonal appraisal i.e.
internal environmental performance. Broadly speaking there are three sets of
Techniques. Internal Analysis
Comparative Analysis
Comprehensive
Analysis
a) INTERNAL ANALYSIS:-
it is the analysis of the internal environment of the organisation strengths &
weaknesses etc. this analysis can be done by various methods:-
i) Value-chain Analysis:-
Value chain is the sequence of activities starting from production to marketing. The
value – chain analysis focuses on a set of these inter-related activities undertaken in an
organisation. The importance of this technique is that the total tasks of an organisation
are segregated into different parts and then evaluated.
ii) Quantitative Analysis:-
It is an operational technique which makes use of a physical unit in quantitative
terms for the purpose of performance assessment. It is one of the most popularly used
methods.
Quantitative techniques
Financial parameters Physical parameters

Ratio Analysis Computation of absenteeism
Economic value-added (EVA) Market ranking
Activity based costing (ABC) Rate of advertising recall
Total cycle time of production
b) COMPARATIVE ANALYSIS:-
27
The technique mentioned aims at comparing the performance of an organisation

with its past performance. This comparison helps in the operational control. There exists
three techniques:-
i) Historical Analysis:-
The technique of Historical analysis is a very easy to implement and a very
frequently used technique. This aims at comparing the present performance of an
organisation uses past date i.e. historical data for analysis of comparison.
ii) Industry Norms:-
This method of comparison uses the standards of leading firms in the same
industry to be used for comparison with the performance achieved by an organisation.
Present performance
Of an organisation. VS Industry norms/average
of performance
iii) Bench marketing:-

Bench marketing is a comparative technique, where the performance of an
organisation is measured against the best practices in an area.
Performance
Of an organisation
VS The best practices
in the Industry
c) COMPREHENSIVE ANALYSIS:-
As the name suggests, it is a technique, which encompasses total activities of an
organisation for the purpose of analysis.
i) Balanced Scorecard:-
This method is based on the identification of four key performance measures of –
customer perspective, internal business perspective, innovation & learning perspective &
financial perspective. The performance of an organisation is measured taking into
account various parameters.
ii) Key Factor Rating:-
It is a very comprehensive method taking a holistic view of the organisational
performance. It takes into account key factors in several areas & then evaluates
performance.
28
Q.10 (a) Write a short note on Industry Analysis.
Ans:- INDUSTRY ANALYSIS:-

Because Organisations are open system, a number of environment factors
influence these inevitably that is suppliers, competitors and buyers.
Suppliers :- They supply the goods
Competitors:- They have impact on out business. Their every step influence us.
Buyers:- By whom we makes profit.

The industrial environment of the firm.
INTERNATIONAL ENVIRONMENT
Economic Env. Legal Env..
The industry env.
Social & Cultural Technological Env.

Env. Suppliers
Political Env. Competitors

Natural Env.
Buyers
INDUSTRY CHARACTERISTICS THAT COULD IMPACT FIRMS PERFORMANCE

The number of firms in the industry
The level and pattern of Promotional expenditure.
The rate and nature of technological competition.
The relative size of firm.
Consumer preferences for the product and for related products.
The rate of demand growth.
The extent of demand growth.
The price behaviour of the leading firm.
The minimum efficient scale of production.
Buyers switching costs.
Demand- side economies of scale.
29
Specificity of plant and equipment to industry etc.
Jockeying Threats of
for position entry
Michael
porter’s
analysis
Powerful
Substitute Suppliers
Products
Powerful
buyers
i) Threats of Entry
i) The economies of scale
ii) Brand identification
iii) Govt. Limitations (License requirement)
ii) Powerful Buyers:-

When buyer can force down prices.
iii) Powerful Suppliers:

When Suppliers can force buyers to pay higher prices
iv) Substitute Products:-

By placing a ceiling on the price it can change to substitute products or services and limit
the potential of an industry.
V) Jockeying for Position:-

The strongest forces which influence the profitability of a firm become the determining
factors in strategy formulation.
Usefulness of Industry Analysis :-
A. Industry Attractiveness
B. Competitive Position.
Industry Attractiveness:-
30
a) Growth potential
b) Profitability of the industry
c) Relative abilities of players.
Competitive Position:-
Where does the firm stand in comparison to others ina particular Industry.
INDUSTRY ANALYSIS
1. Basic Features:-
Size of Industry
Product offering
Volume
2. Industry Environment:-
Fragmented Industry
Emerging Industry
Nature of Industry
Declining Industry
Global Industry
3. Industry Structure:
Market Size
Number of players
Shares of players
Nature of competitions.
4. Industry attractiveness:-
Profit Potential
Growth Prospects.
Barriers in industry entry
5. Industry performance:-
Production
Sales
Profitability
6. Industry Practices:-
Product Policy
Pricing Strategies
Promotion Policy
Distribution Policy etc.
7. Future Scenario:-
Change in consumer Preferences
Product innovations
Entry or exit of firms in a market.
Rate of growth etc.
Conclusion:-
For any strategist to plan for a policy for future requires a complete internal as well
as external analysis. In the external environmental analysis special effort is put on
31
Industry Analysis. The analysis of the Industry includes the overall variables of the
industry includes the overall variables of the industry incorporating its size, nature,
performance, attractiveness, relative market share etc. by analysing the industry, a
Strategist can very well evaluate whether it should enter into a given business with
investments or refrain from going ahead.
Threat of entry:-
A new entrant in an industry represents a competitive threat for established firm

(Called as Incumbents) but the likelihood of new entrant is functional of two factors.
New
Entrant
Barriers
to entry
Retaliatio
n from
Incumben
Major Forces in this are:-
Economics of scale:-
New entrants have to enter the industry in big way to reap economies of scale. There will
be a risk of a strong retaliation to over come these barriers. Auto mobile manufacturers
have customized their product.
Expected retaliation:-
Retaliation (Strong) can be expected if incumbent has a major share in industry but
industry growth is slow.
Product differentiation:-
Product differentiation refers to physical/perceptional differences that make a product
special/Unique. Companies such as Pepsi, Coke spend huge amount on advertisement
and create emotional bondings. It is very difficult to switch customers from them.
Capital Requirement:-
Competing in new Industry needs huge capital investment. Even when competing in a
new industry is attractive, the huge capital needed for successful market entry may
create a barrier.
Cost disadvantages;-
32
Established companies have cost advantages that new entrants can not duplicate e.g.
favourable locations Mc Donalds.
Switching costs:-
If a buyer were to change his supplies from an established supplier to new comer then
cost may have to be paid in form of new handling equipment, training cost etc.
b) Intensity of Rivalry:-
Firms operating within an industry are mutually dependent. Action takes by one firm
usually attract competitive retaliation in from of price cutting modifications in product or
promotion etc. This variable studies the extent of competition amongst the competing
firms.
c) Powerful suppliers:-
A supplier is said to be powerful when:-
Strong Supplier:-
It is dominated by a few large companies & is more concentrated than the industry
to which it sells Selling to fragmented buyers means that concentrated suppliers will be
able to exert great influence over price, quality etc. for e.g. pharmaceutical industry.
No Substitute:-
If there are no substitute products to buyers and if they have no alternative
sources of supply then all buyers are weak in relation to existing suppliers.
Buyer’s Importance as a Customer:-
If the buying industry is not an important customer of the supplier then the supplier
is in a strong position for example, McDonald is a much more important customer of soft
drink producer than a small disc would be.
Suppliers ability to enter the buying Industry:-
When supplier can enter the Industry of their customer, then their bargaining
power is increased. If the firm has its own production, R & D and has no distribution
channel, they can put great pressure on buyers, by threatening them to enter the market.
d) Powerful buyers:-
Customers can force price down demanding better quality or more service & play
competition off against each other, in case they are stronger that the suppliers.
Buyer’s Concentration:-
Buyers are concentrated at one place or buy in large quantities related to total
industry sales. In such scenario buyers can get deals stuck in their favour. For e.g.
Computer & Automobile industry.
Price Sensitivity:-
If the product that the buyers purchase represent a large portion of buyer’s cost. In
such a case, price is an important issue for buyers. They all are keen to bargain for
favourable terms & indulge in selective buying. For e.g. Refrigerator v/s Cigarettes.
Standardized products:-
If the products that the buyers purchase are standardized, in such case buyers
have a tendency to play one seller against another. For example steel is a standardized
product, all automobile like Maruti, Hyundai can have bargaining power for that.
e) Threat of Substitute products:
Substitute products are different goods or services from outside a given industry that
perform similar or the same function as a product that the industry produces. The
presence of substitute products poses a threat on prices that can be changed by an
industry. When relative price of substitute product rise, for example Tea & Coffee, plastic
33
bag vs paper beg, Oil vs LPG. Customers tend to switch their localities towards the
substitute products because of low price.
CONCLUSION:
After having a view of Porter’s model we conclude that how a firm can do its competitive
analysis & which can be done to avoid this by studying porter’s five forces and make
effective strategic planning.
Future objective
where will emphasis
in future?
Current Strategy
VS
How are we currently
competing?
Response
What will our
Assumptions competitors do in
Are we operating future?
under a status quo?
Capabilities
What are our strengths
& weakness?
Ques:- What do you mean by competitive advantage? What are the determinants of
national competitive advantage? Explain approaches and types of competitive advantage?
Ans:- Definition:- Competitive Advantage – a situation in which there is a match between the
distinctive competencies of a firm and the factors critical for success within its industry that
permits the firm to out per form competitors. Competitive Advantage profile a statement showing
34
competitive position of an organization in the market place. It is also known as Strategic

Advantage.
Dynamics of National Competitive Advantage:-

National Competitive Advantage:- Competitive advantage to a country in relation to other
countries. Like each organization , each country is known in terms of its competitive advantage.
For ex.:- USA of computers, credit cards, Japan for electronic & automobiles, Germany for
printing Presses, Switzer land for pharmaceuticals and India for software professionals. The
question is what factors have contributed to generate advantage to these countries in specific
areas? The answer of this question is important for the purpose of generating competitive
advantage at the global level.
According to M.Parter has categories various national attributes in four groups.
Firm Strategy
structure & rivalry
Factor conditions
Demand Condition
Related &
supported
Industries
1. Factor Condition:- Factor that provide base for undertaking various business activities.
These resources can be divide into five broad categories-human resources, knowledge
resource, physic resource, capital resource & infrastructure.
2. Demand Condition:- The nature of demand conditions for an organization’s or industry’s
product services in the country is important because it determines the rate of and nature
of improvement & innovation by the organisations. These factors either train organisations
for world-class competitive or fail to adequately prepare them to competent in the global
market place
3. Related & supporting Industries:- Apart from the main industry in which context
competitive advantage is talked about, the conditions of related & supporting industries
also determine industry’s competitive advantage. However the Long run , the relationship
between main industry & related & supporting industries becomes reciprocal. For ex.:- If
the main Industry is developed, the relate industries will also develop with a time lag. In
the same way, the related industries will provide support to the further development of the
main industry.
4. Firmstrategy,structure & Rivalry:- Differences in strategy, structure & rivalry create
advantages or disadvantages to firms. Competing in different types of industries in a
nation. The aggregate of these determines national competitive advantage. The way
different firms shape their strategy- ranging from a broad outlook and long-term
profitability to narrow range and short term profitability-determine how the nation will be
35
competitive. For ex.:- US companies rank return on investment, share price increase, &
market share in that order.
Approaches for Competitive Advantage:-
These approaches are as follows:-
1. Generic competitive strategy
2. STRATEGIC intent
3. Bench Marketing
4. Synergistic approach
5. critical success factors approach.
1. Generic competitive strategy:- A basic strategy based on the principle that the achievement of
competitive advantage is at the case of superior market strategy.
COST DIFFERENTIATION
BROAD Overall cost leadership Differentiation Competitive

& Scope
Cost Focus Focused

NARROW
Different ion
Competitive Base
(a) Overall coat leadership:- an organization’s position as the Industry’s least cost
producer in broadly defined markets or a wide mix of products.
(b) Cost Focus:- a situation in which an organisation focus on a narrow market
segment & offers product at the lower price than its competitors based on cost
advantage.
(c) Differentiation:- is the act of designing a set of meaning full differences of
distinguish the organisations offerings from competitor’s offerings
(d) Focused Differentiation:- differentiation of activities to generate competitive
advantage in a narrowly defined market/ coustmor segment.
II. Strategic Intent:- ambitions and obsession for winning which are used a means for
generating competitive advantage.
According to Hamel & Prahalad:-
(a) Building layers of advantage
(b) Searching for loose bricks
(c) Changing the rules for engagement
(d) Collaborating
III. Bench Marking:- It is another tool which can be used to generate competitive advantage. It
is a process of identifying, understanding, and adapting outstanding practices from within the
same organization or from other business to help improve performance.
Types of Benchmarking:-
1. Product Benchmarking
2. Competitive bench marking
3. process bench marking
4. strategic benchmarking
5. global benchmarking.
IV. Synergic Approach:- can be used as a means do generating competitive advantage to an
organisation if the managers are sufficiently aware about how synergistic effect is developed.
Synergy is the process of putting two or more elements together to achieve a sum total greater
than the sum total of individual elements separately. This effect is described as 2+2=5 effect.
36
Areas of synergistic effect:-

- Production synergy
- Marketing synergy
- Research development synergy
- Financial synergy
- General management synergy
V. Critical Success factors Approach:- characteristics, conditions or variables which when
sustained can have significant impact on the success of an organisation competing in a
particular industry.
• Organisational Critical success factors:-
Mckinsey 7’s framework:-
Strategy, Structure, systems, staffs, skills, style, shared values
• Types of competitive Advantage:-
FEW MANY
Volume Specialized
LARGE
Size of advantage
SMALL
Stalemated Fragmented
Number of approaches of competitive advantage

1. Volume:- volume of competitive advantage exists when organisation has very few
advantages but these are quite large in volume.
For ex.:- In luxury car segment, product differentiation in terms of style, comfort, design etc. is
used for generating competitive advantage and cost becomes secondary.
2. Specialized:- specialized competitive advantage exists when an organisation has the
opportunity to adopt many approaches together to generate competitive advantage.
For ex.:- Organisations manufacturing specialized machinery for selected market-segment
can combine both approaches-low cost & product different ion- to be competitive.
3. stalemated:- competitive advantage exists when an organisation operates in an industry in
which meaningful product, differentiation is not possible & industry’s cost structure is quite
rigid.
For ex.:- sugar industry, product differentiation does not exist.
4. Fragmented:- competitive advantage exists an organisation has many opportunities but
each opportunity has limited payoff.
5. For ex. Restaurants.
37

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BUSINESS POLICY & STRAEGIC ANALYSIS (CP-301)

BUSINESS- Corporate/ Overall functioning

POLICY – Planning/ Formulation of Strategies

Actual Position Anticipated Position

Planning Designing Implementing Steps

Study of Business Policy

• Nature of Business Policy:-

1. Business Policy is a Study:-

Mergers & Acquisitions

Short-term Goals Long-term Goals

• Evaluation of Business Policy:-

Planned Policy formulation – Integration areas

Hartvard Business School introduced an

Strategic process of business Responsibilities of General management

The study of Business Policy makes the study of mana-

Thus the Business policy is important for

a) Business Policy seeks to integrate the knowledge gained in various functional

d) Business Policy helps to create an understanding of how policies are formulated

Ques. 2:- Differentiate between Vision and a ‘Mission’ Mention the

“Mission is the essential purpose of the organization concerning particularly why it is in

Q.3:- What is the concept of Environment in Strategic Management? What aspects

Ans:- Environment: The term basically means the surroundings: external

Internal Vs. External General Vs. Relevant

Impact of technology on human beings and environmental effort.

iv) Economic Environment:-

Q.4.: Define SWOT. What is the rationale of performing SWOT?

In the cut-throat competition faced by the business today a detailed environmental

Weakness of high cost of production may be justified by unique features, high

An opportunity is any chance or an event, which can be utilized and taken

THE BUSINESS STRATEGIC-PLANNING PROCESS

Feedback & Control

Indicators of competitive strengths

5. High cost of production

Stars Question Marks

Cash Cow Dogs

Protect position Invest to build Build

Low Protect & Manage for Divest

Strong Medium Weak

Market attractiveness – Competitive - Position Portfolio

ACCORDING TO ALFRED D. CHANDLER (1962)

ACCORDING TO WILLIAM F.GLUECK (1972)

In business the strategy operates at different levels.

SBU 1 SBU 2 SBU 3

Production Operations Marketing Finance Personnel

Establishment Formulation of Implementation Strategic

The board activities include:

b) Chief Executive Officer:-

They look after:

DISADVANTAGES OF STABILITY STRATEGY

- Acts as a testing ground, before entering into a new venture

a) Expansion through concentration:-

b) Expansion through Integration:

Potato Chips Distribution

Backward Integration Existing business Forward Integration

c) Expansion through diversification:-

Marketing Technology Marketing &

d) Expansion through Cooperation:-

e) Expansion through Internationalisation:-

Pressure for local Responsiveness

To move out of loss-making business.

Sequential Simultaneous &

Q.8: Distinguish between the different approaches in Decision – Making.