Birla Institute of Technology & Science, Pilani

Work-Integrated Learning Programmes Division

Second Semester 2016-2017

Comprehensive Examination
(EC-3 Regular)

Course No. : MM ZG611

Course Title : STRATEGIC MANAGEMENT AND BUSINESS POLICY
Nature of Exam : Open Book
Weightage : 45% No. of Pages =5
Duration : 3 Hours No. of Questions = 8
Date of Exam : 09/04/2017 (FN)
Note:
1. Please follow all the Instructions to Candidates given on the cover page of the answer book.
2. All parts of a question should be answered consecutively. Each answer should start from a fresh page.
3. Assumptions made if any, should be stated clearly at the beginning of your answer.

Q.1. "Cash is a habit in India that cannot be changed overnight. But with the government endorsing a
cashless economy... the stage is set for growth," says COO of one of the start ups company.

Identify by giving examples, how changes in external environment as demonetization turned out
to be opportunity for some me companies and threat for others? [4]

Q.2. Read the case-let below and answer the question given at the end of the case:

Dutch company Philips, which was synonymous with lighting and entertainment systems has
begun to increase focus on developing the company as a healthcare player currently investing big
in the personal health space, preventive healthcare and diagnosis and home & hospital care space,
says Abhijit Bhattacharya, global CFO, Royal Philips. Investing 1.7 billion in R&D, at their
centre in Bengaluru to develop products like mobile x-rays. Their Bengaluru centre plays a key
role in this and the headcount is growing by 20%.

History of Philips: More than a century of innovation and entrepreneurship

Inspired by the fast-growing electricity industry and the promising results of son Gerard’s own
experiments to make reliable carbon filaments, in 1891 Frederik Philips financed the purchase of
a modest factory in Eindhoven. Their plan? To bring cost-effective, reliable electric incandescent
light bulbs to everyone who needed them.

Over the years since then, Philips have continued to improve people’s lives with a steady flow of
ground-breaking innovations.

1891 - 1915: From light revolution to product evolution

Philips began by making carbon-filament lamps and quickly became one of the largest producers
in Europe. From the outset, Philips was an export-oriented company. Large orders were won in
Russia, including one from the Tsar to light up the Winter Palace. In 1912, Philips became a
limited company, with publicly traded shares, listed on the Amsterdam Stock Exchange. With
developments in new lighting technology fueling a steady program of expansion, Philips
established a research laboratory in 1914 – the world-renowned ‘NatLab’ – to study physical and
chemical phenomena and stimulate product innovation.

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1915 – 1925: Innovation and diversification: X-rays and radio reception

In 1916, Philips received royal recognition on its 25th anniversary. Two years later it introduced a
medical X-ray tube. This marked the point when the company began to diversify its product
range and to systematically protect its innovations with patents in areas stretching from X-ray
radiation to radio reception. During this period, sales organizations were established all over
Europe and in countries like China, Australia and Brazil.

1925 – 1940: The first radios, televisions and electric shavers

In 1927, Philips began producing radios, and within five years it had sold one million sets and
become the world’s largest manufacturer of radios and radio tubes. A year later, it produced its
100-millionth radio valve. In 1933 the company started production of medical X-ray equipment
in the United States. Having been involved in experiments in television since 1925, Philips
showcased its first television at the Annual Fair in Utrecht in 1938. One year later it launched its
pioneering rotary electric shaver, the Philishave.

1940 – 1970: A succession of technology breakthroughs

Science and technology underwent tremendous development in the 1940s and 1950s, with Philips
Research laying the basis for later ground-breaking work in transistors and integrated circuits.
The year 1949 saw the introduction of the Philips Synchrocyclotron, enabling research into the
treatment of malignant tumors. The company also continued to make major contributions to the
recording, transmission and reproduction of television pictures. And in 1963 it introduced the
Compact Audio Cassette, setting the global standard for tape recording.

1970 – 1980: Continued product innovation for images, sound and data
The flow of exciting new products and ideas continued throughout the 1970s. In a decade when
energy management was high on the agenda, Philips Research contributed to the new energy-
saving lamps. Key breakthroughs were also made in the processing, storage and transmission of
images, sound and data. These subsequently led to the invention of optical telecommunication
systems, the LaserVision optical disc, and the highly successful Compact Disc.

1980 – 1990: Technological landmark: the Compact Disc

The 1982/83 market launch of the Compact Disc – developed together with Sony – represented
another technological landmark for Philips. This new digital format delivered pure sound without
background noise. Key to CD’s success was the companies’ decision to grant manufacturing
rights to other producers, immediately establishing CD as a new global standard. Other
milestones from this period include the production of Philips' 100-millionth TV set in 1984 and
the founding of Philips China Ltd in 1985.

1990 – 2000: Far-reaching changes and new successes

The 1990s was a decade of significant change for Philips, as the company simplified its structure
and reduced the number of areas in which it operated. In healthcare, Philips adopted a new,
people-centric approach to product design, the aim being to make medical systems easier for
clinicians to use, and more comfortable for patients. Building on the success of its Compact Disc
technology, Philips again partnered with Sony to introduce the DVD in 1997. This ground-
breaking innovation went on to become the fastest-growing home electronics product in history.
21st century: Enduring commitment to innovation

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Moving into a new century, Philips remained fully committed to innovation. Reflecting its focus
on health and well-being, the company introduced the Ambient Experience in 2002. This
innovative solution improves hospitals’ workflow and patient care by integrating architecture,
design, dynamic lighting and sound. Other milestones include, in 2006, the first commercial
launch of a 3D scanner, providing unprecedented image quality for CT scans. In 2012, Philips
introduced the AlluraClarity interventional X-ray system, which offers excellent visibility at low
X-ray dose levels. Recent innovations include the development of the Philips Smart Air Purifier
and solutions for minimally-invasive surgery.
Do you think, for 21st century, this is the right direction that Philips have taken to be in
healthcare sector? Yes/No? Justify your answer by analyzing Strengths & Opportunities (SO)
that Philips can leverage upon. [4]

Q.3. Read the case-let below and answer the questions given at the end of the case:

Air India (AI) needs more funds to stay alive

Inefficiencies of state-run Air India (AI) may mean that a lot more public money will be needed
to keep the Maharaja alive than earlier envisaged, especially with the public sector carrier
"significantly understating" its losses.

In 2005-06, Air India had ordered 50 wide body aircraft from Boeing worth Rs 33,197 crore and
erstwhile Indian Airlines had ordered 43 narrow body from Airbus worth Rs 8,400 crore. "The
airline had over-provisioned wide body aircraft ... , while it had an acute shortage of narrow body
aircraft. Even though the company was aware of the shortage and had initiated the process of
leasing Airbus A-320 aircraft as early as July 2010, only five aircraft could be inducted by March
31, 2015, against the requirement of 19," the auditor, which had earlier also questioned AI's wide
body order, said. In the latest report What's more, AI failed to efficiently use the aircraft it had.
"Aircraft remained grounded for prolonged periods due to non-availability of components, spares,
serviceable engines which led to cannibalization and more protracted grounding periods. While
the aircraft remained grounded, the airline paid substantial amounts for their lease rent (for leased
aircraft) or finance cost (for owned aircraft)."

(a) From Strategic management perspective, What could be the reasons for poor performance
of Air India? [2]

(b) At this point of time, which corporate strategy would be appropriate for Air India? Give
your answer with appropriate rationale. [2 + 2 = 4]

(c) Suggest the appropriate business strategy for Air India to establish competitive position in
the market. [3]

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Q.4. Read the case-let below and answer the question given at the end of the case:

Samsung heir Lee Jae-Yong is indicted on bribery charges

The heir to the Samsung empire and four other top executives from the world's biggest
smartphone maker have been indicted on multiple charges including bribery and embezzlement,
South Korean prosecutors said.

Lee was arrested on February 17, 2017 over his alleged role in the corruption scandal involving
President Park, dealing a fresh blow to the technology giant and standard-bearer for Asia's fourth-
largest economy.

Samsung is suspected of providing tens of millions of dollars in money and favours to Park and
her jailed friend Choi Soon-Sil in exchange for government support of a merger deal between two
Samsung affiliates in 2015.

Relate the behavior of Samsung Chief Lee Jae-Yong as mentioned above with appropriate stage
of moral development. What do you suggest for the organizations to refrain people from such
behaviours? [2 + 1= 3]

Q.5. Based on Nokia's Harvard case study, answer the following questions:

(a) Using the Strategy canvas, list down 4-6 Value elements of Nokia mobile phone. Using
the Strategy canvas, list down 4-6 Value elements of iPhone. [2 + 2 = 4]

(b) Using the Four Actions framework, draw the ERRC matrix for the new Nokia phone that
you want to design with details of what Value elements are to be eliminated, reduced,
raised & created. [4]

Q.6. Apart from four perspectives given by Kaplan and Norton in Balanced scorecard framework, can
you suggest any other perspective from which the organizations should measure their
performance? [2]

Q.7. Read the case-let below and answer the questions given at the end of the case:

Intel to buy Israeli driverless car-tech firm Mobileye for $15 billion

U.S. chipmaker Intel agreed to buy Israeli driverless car-technology firm Mobileye for $15.3
billion on Monday, positioning itself for a dominant role in the fast-moving autonomous-driving
sector.

The $63.54-per-share cash deal marks the largest purchase of a company solely focused on the
self-driving sector and could significantly alter the competitive landscape among key technology
and systems suppliers, including chipmakers Nvidia Corp and Qualcomm Inc and systems
integrator Delphi Automotive PLC.

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 Mobileye's shares jumped 30 percent to $61.30 in late morning U.S. trading, while Intel's shares
were down 2 percent. Shares of Delphi, which has partnerships with both companies, were up 3
percent.
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The deal underscores the expanding alliances between automakers and their suppliers as they race
to develop self-driving cars, a concept that once seemed a science-fiction dream but is drawing
closer to reality.

While Intel is known for hardware chips and Mobileye for collision detection and mapping
software, the merger promises to create an expanded portfolio of technologies needed for
driverless vehicles. It also strengthens Intel's position in the sector against rival chipmakers
Nvidia and Qualcomm.

The Intel-Mobileye portfolio includes cameras, sensor chips, in-car networking, roadway
mapping, machine learning, cloud software and data fusion and management.

"It's an area where (Intel) has had very little presence - the automotive market, and so this is a
tremendous opportunity for them to get into a market that has significant growth opportunities,"
said Betsy Van Hees, an analyst at Loop Capital Markets.

"Mobileye's technology is very critical... The price seems fair," she added.

(a) What kind of structural and cultural issues may be dealt by Intel after acquiring and
integrating Mobileye? [2]

(b) How do you define sustainability? Do you think driverless car as a product is a
sustainable product from India's perspective? [2]

(c) Can we call driverless car a disruptive innovation in the current scenario? Justify your
answer with appropriate rationale. [3]

(d) Which stage of S-curve, do you place driverless car? What challenges the current
automobile companies may have to deal with in order to move to next S-curve of
driverless car? [1 + 2 = 3]

Q.8. Apply design thinking approach to one of the existing products/services in your organization
and suggest how it can be taken to the next level. [5]

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