Commonwealth Executive MBA

School of Business
Bangladesh Open University

Semester: 182 (3rd Level) - Batch 2020

Final Assignment (Make-up for Class Test and Class Attendance)

Course Title: Strategic Management
Course Code: SCOM 3610

Submitted By: Submitted To:

MD. HARUN OR RASHID Dr. Miraj Hossain
Semester: 182(3rd Level) Assistant Professor ( Management)
Commonwealth Executive MBA Jagannath University
ID Number : 172-71-890-013
Mobile : 01723090823
email : harunrashid106@gmail.com
Submission Date: 15/08/2020

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Questions 1-a): Why is environmental analysis important to set organizations’
strategy? What are the logical steps of environmental analysis?

Answer: Environmental analysis is important to set organizations’ strategy are as follows

Environmental analysis is a strategic tool. It is a process to identify all the external and
internal elements, which can affect the organization’s performance. The analysis entails
assessing the level of threat or opportunity the factors might present. These evaluations are
later translated into the decision-making process. The analysis helps align strategies with the
firm’s environment.
Environmental Analysis gives the strategic manager time to anticipate opportunities and to
plan alternative responses to those opportunities. It also helps them to develop an early
warning system to present threats or develop strategies, which can turn a threat to
the organizations advantage.
The logical steps of environmental analysis: There are many strategic analysis tools that a
firm can use, but some are more common. The most used detailed analysis of the
environment is the PESTLE analysis.
 P= Political Environment
It refers to the influence exerted by the three political institutions viz., legislature
Executive and the judiciary in shaping, directing, developing and controlling business
Activities. A stable and dynamic political environment is indispensable for business
growth.
 E= Economic Environment
There is close relationship between business and its economic environment. Business
obtains all its needed inputs from the economic environment and it absorbs the output
of business units. It includes GDP, GNP, purchasing power, fiscal policy and
monetary policy are included in this factor.
 S= Social and culture Environment
It refers to people’s attitude to work and wealth; role of family, marriage, religion and
education; ethical issues and social responsiveness of business.
 T= Technological Environment
Technology is understood as the systematic application of scientific or other
organized knowledge to practical tasks. Technology changes fast and to keep pace
with it, businessmen should be ever alert to adopt changed technology in their
businesses.
 L= Legal Environment
This refers to set of laws, regulations, which influence the business organizations and
their operations. Every business organization has to obey, and work within the
framework of the law. The important legislations that concern the business enterprises
include: company act, factories act, industrial disputes act, payment or compensation
acts or many more.
 E= Ecological/ Natural Environment
Business, an economic pursuit of man, continues to be dictated by nature. To what
extend
Business depends on nature and what is the relationship between the two constitutes an
interesting study.

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Questions 1-b): According to Michael Porter, when the suppliers and customers
bargaining power is stronger and when their bargaining power is weaker?

Answer: When the suppliers bargaining power is stronger and when bargaining power is
weaker

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# When the Customers/buyer bargaining power is stronger and bargaining power is weaker

Questions 1-c): What are the steps of SWOT analysis? How SWOT analysis of an
organization lead to strategy formulation?
Answer: The steps of SWOT analysis are as follows
While undertaking SWOT analysis of any company we can follow the following four major
steps:
i. Identification of opportunities and threats posed by external environment.
ii. Identification of opportunities and threats posed by competitors.
iii. Identification of the internal strengths and weaknesses of the organization.
iv. Assessing the attractiveness of the organization’s situations and draw conclusions
regarding the need for strategic action.
The details of the steps involved in the SWOT analysis.
Step-1: External Environmental Analysis
• Identify the key political, economic, social-cultural, demographic, natural/ecological
and technological forces that are most likely to affect the organization.
• Monitor information on the environmental forces.
• Select the method to be used in forecasting these forces.
• Forecast the trends in these forces.
• Identify the market opportunities on the basis of the forecasts of these forces.
• Identifying the threats to a company’s future profitability.

Step-2: Competitive Analysis

• Analyze the industry structure.
• Analyze the nature of competition.

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 • Identify and analyze individual competitors.
• Identify key strengths and weaknesses of the company as compared to those of
competitors.
• Identifying company’s market opportun
opportunities
• Identify threats and opportunities based on industry competitiveness.

Step-3:
3: Internal Environmental Analysis
• Identify the areas for analysis (such as financial position, product position, etc.)
• Analyze each of the selected areas.
• Identifying company’s internal strengths and resource capabilities.
• Identifying company’s internal weaknesses and resource deficiencies.
• Evaluate the strengths and weaknesses for their strategy
strategy-making
making implications.

Step-4:
4: Concluding SWOT Analysis

• Assess the attractiveness of organization’s situation on the basis of identified strengths,

weaknesses, opportunities and threats.
• Draw conclusions regarding the need for strategic action

Questions 1-d): Prepare a SWOT analysis of the organization whe

where
re you are working.

Answer: Strengths, weaknesses, opportunities and threats point to the need for strategic
action. Managers need to –
a) undertake actions to protect/improve the company’s strengths,
b) initiate efforts to overcome the weaknesses,
c) pursue market opportunities well-suited
well suited to the company’s resource capabilities, and
d) take actions to defend against external threats to the company’s business.

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Questions 2-a): What are the different forms and levels of strategy? Present the
different types of generic strategies mentioned by Thompsons and his associates.

Answer: The different forms and levels of strategy

Strategy can be formulated at three levels, namely, the corporate level, the business level, and
the functional level/operational level. At the corporate level, strategy is formulated for any
organization as a whole. Corporate strategy deals with decisions related to various business
areas in which the firm operates and competes. At the business unit level, strategy is
formulated to convert the corporate vision into reality. At the functional level, strategy is
formulated to realize the business unit level goals and objectives using the strengths and
capabilities of your organization. There is a clear hierarchy in levels of strategy, with
corporate level strategy at the top, business level strategy being derived from the corporate
level, and the functional level strategy being formulated out of the business level strategy.

The different types of generic strategies mentioned by Thompsons and his associates:

There are five main strategies in this field:

1) Low-Cost Provider Strategy-Mixture of Lower Cost and A broad cross-section of

buyer, for example: Target and Costco.
2) Broad-Differentiation Strategy- Mixture of Differentiation and broad section of target
market, for example: Apple and Toyota
3) Focused Low-Cost Strategy-Mixture of A narrow market niche and lower cost, for
example: Dollar Tree and Visio Electronics
4) Focused Differentiation Strategy- Mixture of Differentiation and a narrow market
niche, for example: Aston Martin and Rolex Watch
5) Best-Cost Provider Strategy- This is the best of all; this strategy has the mixture of all
of the above mentioned strategies, i.e. Differentiation, Lower Cost, Board cross section
of buyer, and a narrow market niche. For example: Lexus from Toyota.
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Questions 2-b): As a manger of your company, if you are asked to undertake and
execute strategy in your business, which business level strategy would you follow? Why?

Answer: I would follow the Functional level strategy. Because

Functional level strategies relate to the different functional areas which a strategic business
unit has, such as marketing, production and operations, finance, and human resources. These
strategies are formulated by the functional heads along with their teams and are aligned with
the business level strategies. The strategies at the functional level involve setting up short-
term functional objectives, the attainment of which will lead to the realization of the business
level strategy.

Questions 2-c): When organizations should go for differentiation strategy? How

differentiated can be achieved?
Answer: When organizations want to increase profits without high risk or lowering the prices,
consider creating a differentiation strategy.
 Differentiation strategy refers to making a company’s product different from the
similar products of the competitors. This strategy is associated with product
differentiation (and service differentiation).
 A product (or service) can be differentiated on the basis of its form, shape, quality,
durability, style, design, or some other features of the product.
 The goal of differentiation strategy is to achieve a competitive advantage by offering
a product to customers that is considered as unique in some important ways. The
differences made in the product must be of value to customers.
 A differentiation strategy calls for the development of a product or service that offers
unique attributes that are valued by customers and that customers perceive to be better
than or different from the products of the competition.
The ways to achieve product differentiation:
 Differences in quality  Responsiveness to customers
 Innovation & creativity  Responding to customers’ psychological
 Unique taste desires
 Multiple features  Wide choice of customers
 Special features  Prestige and distinctiveness
 Wide selection (one stop  Full range service/ Product reliability
shopping)  Availability of spare parts

Questions 2-d): What are the different types of focus strategy? In which market
situation focus strategy if suitable and what are the reasons for failure of focus strategy?
Answer: Focus Strategy: Two types- (best-cost, and differentiation)
 The focus strategy concentrates on a narrow segment and within that segment attempts to
achieve either a cost advantage (low-cost strategy) or differentiation strategy. The
premise is that the needs of the group can be better serviced by focusing entirely on it.
 Focused low-cost strategy is the strategy of entering into a niche market at low cost with
a unique type of product that has a special need among the customers in the niche market.
 Focused-differentiation strategy is the strategy of operating business with a
differentiated product in a chosen niche market.

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 A firm using a focus strategy often enjoys a high degree of customer loyalty, and this
entrenched loyalty discourages other firms from competing directly.
 Because of their narrow market focus, firms pursuing a focus strategy have lower
volumes and therefore less bargaining power with their suppliers. However, firms
pursuing a differentiation-focused strategy may be able to pass higher costs on to
customers since close substitute products do not exist.
 Firms that succeed in a focus strategy are able to tailor a broad range of product
development strengths to a relatively narrow market segment that they know very well.
 Some risks of focus strategies include imitation and changes in the target segments.
Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in
order to compete directly. Finally, other focusers may be able to carve out sub-segments
that they can serve even better.
Suitable Market Situation for Focus Strategy:
Competitors’ Inability/ unwillingness of competitor’s to serve
apathy/unwillingness niche market

Profitable niche Availability of different niche in the industry

High Growth potentials Consumer’s distinctive preferences

No risk of segment overcoming Company’s farsightedness/ foresight

Focuser’s competitive ability

The Following reasons for failure of focus strategy:

Risk from more appealing products High attractiveness of the niche-market

Shifting of customers’ preferences Withering cost advantages

Universality of customers’ needs Fear of low attractiveness, and Price-war

Question: 3. a) what is a complementary strategy? Briefly present some complementary

strategies that can be chosen by company.
Answer: complementary strategy
A complementary strategy can be defined as any organizing activity which recruits external
elements to reduce cognitive loads. In addition to Michel Porter’s generic strategies, some
other complementary competitive strategies are also used by many companies for achieving
competitive advantages. Thompson and his associates call them ‘complementary strategic
options’. Usually one or more of these strategic options are chosen by a company to
complement its choice of a generic strategy.
Some complementary strategies are as follows:
 Strategic Alliance Strategy: Strategic alliances are cooperative agreements between
two or more firms to help each other in business activities for mutual benefits. The
strategic allies do not have formal ownership ties. They rather work cooperatively
under an agreement. Strategic alliances are formed by companies to achieve win-win
outcomes. Strategic alliances create a good ground for the allies to perform joint
research, share technology and improve products.

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  Joint Venture Strategy: joint ventures refer to creating a new organization by two or
more companies. Joint venture involves an equity arrangement between two or more
independent enterprises that results in the creation of a new organizational entity. The
partner-companies own the newly created firm. To form a joint venture, at least two
firms must agree to jointly establish a new firm.
 Merger Strategy: Merger takes place when two or more organizations merge
together and their operations are absorbed by a new company. A merger is a strategy
through which two firms agree to integrate their operations on a relatively co-equal
basis because they have resources and capabilities that together may create a stronger
competitive advantage.
 Acquisition Strategy: An acquisition occurs when one company purchases (or
acquires) another company. It is a strategy through which one firm buys a controlling
or 100 percent interest in another firm by making the acquired firm a subsidiary
business within its portfolio.
 Outsourcing Strategy: Outsourcing strategy refers to a strategy of procuring raw
materials or parts and components from vendor/suppliers or having any value chain
activities performed by outsiders. When a firm adopts outsourcing strategy, it relies
on outside vendors to supply products, support services or functional activities.
 Offensive Strategy: An offensive strategy consists of a company’s actions directed
against the market leaders to secure competitive advantage.
 Defensive Strategy: A defensive strategy consists of a company’s actions directed for
protecting its competitive advantage.
 First-Mover Strategy: Being the first-mover means the firm is the first to initiate a
strategic move.
 Late-Mover Strategy: Being the late-mover means the firm is not interested to take a
strategic move first, rather it waits to see what happens in the marketplace after the
competitors have implemented their strategies.

Question: 3. a): Explain four different types of market and their characteristics.
Answer: Four different types of market and their characteristics are as follows
i). Consumer Market: As the name suggests, the consumer market involves marketing of
consumer goods such as Television, Refrigerator, Air conditioners etc.Today a lot of focus
has shifted to consumer goods marketing because a consumer has a lot of choices.
The brand loyalty is at its lowest and the worst fear a brand can face now is a high rate of
brand defection. Along with the branding part, the costing part too needs to be considered in
the consumer market.There is inventory management, logistics, manufacturing, promotions,
strategies and whatnot. Consumer durable market is characterized by the presence of high
competition, penetration pricing, dynamics of channel management and finally a high
expense on manufacturing and distribution.

ii). Business Market: Similar to consumer markets, nowadays even the organizational buyer
has numerous options in his kitty. Just at the number of software and hardware services
providers in the Market. For software there’s IBM, Accenture, Oracle and several other top
brands. For hardware there’s Microsoft, Dell, and others. The competition is increasing.
Furthermore, the organizational buyer will think 4–5 times before purchasing a product
because of the cost involved. An order for computers for an multinational company’s office

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will probably go in crores. Because of the cost involved, Organizational buyers make it a
point to be much more knowledgeable than any average customer. Business markets involve
selling of projects too. Finally, In case of business markets, the sales force, the price and the
product have a much upper value than the promotions.

iii). Global Markets: The changes in the cost of transportation, government policies and the
overall need for expansion have given an impetus to globalization. The strategies of global
market companies may differ from each other but the core concept is the same. Most global
marketing companies work on one fundamental. “Think local, act global”. The company
which comes at the top of my mind is McDonalds and Coca Cola. Both known for their
global presence as well as for the way they customize their message based on the country
they are in. Companies may be global on the basis of both – business to business as well
as business to consumers. The challenges faced by global companies are much more than
those faced by local companies.

iv). Government or nonprofit market: The government market mainly involves

Government offices, ordnance factories, army, navy and other government departments. The
non profits on the other hand may involve groups based on different beliefs some of which
really have an excellent brand name and are recognized by several companies. Both of these
entities have a limited purchasing budget and hence the price of products is important. Most
government and nonprofit organizations involve the issuance of tenders and bids. The one
to bid the lowest is known as L1 and the one to bid the highest is known as H1. Naturally,
L1 wins the bid. There are several companies which have modified their products specifically
for the government markets to come L1 in these tenders and bids. The products may be a bit
inferior, nonetheless they do meet the government’s requirement and that is what matters in
the end.

Question: 3. c): Explain the matching Strategy for Market Leader, Runner-up Industry
and Weak Firms.
Answer: Strategy for Market Leader
The main strategic intent of the industry leaders is focused on defending the existing market
position as well as steadily strengthening the position. In order to retain the leadership
position in the industry, the leaders might follow several strategic approaches.
(a) Offensive Strategy: An offensive strategy consists of a company’s actions directed
against the market leaders to secure competitive advantage. An offensive strategy must be
creative so that competitors cannot easily thwart it. Offensive strategies include dramatic
reduction of price, a highly creative and imaginative advertising campaign, or a uniquely
designed new product that suddenly attracts customers substantially.
(b) Defensive Strategy: A defensive strategy consists of a company’s actions directed for
protecting its competitive advantage. Defensive strategy is suitable in situations where a
company wishes to make most profit out of its present market position. Such a strategy
requires enough capital to spend for strategic actions in order to protect the company’s ability
to compete in the market. The major objectives of defensive strategy include protecting the
present market share, strengthening the market position and protecting the company’s
existing competitive advantages.

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(c) Muscle-flexing Strategy: An industry leader may undertake a strategy of muscling
smaller competitors and customers to bolster its own competitive position.
Matching Strategy in Runner–up Industry
(a) Offensive Strategy: This strategy is useful to a market-challenger runner-up firm. The
firm wishing to build a competitive advantage may adopt offensive strategy through:
 Innovating products;
 Building a good brand image;
 Introducing better products ahead of the competitors;
 Forming strategic alliances with the key intermediaries;
(b) Growth Strategy: Another viable strategy for a market-challenger is to follow the
strategy of growing through acquiring other similar firms. This helps expand the market
share.

(c) Market-Niche Strategy or Focus Strategy: A runner-up firm may look for a vacant-
niche market. The niche market that has been bypassed or neglected by the market leaders is
suitable for the runner-up firms. However, in order to be viable, the niche should have
enough member of customers to be profitable, reasonable growth potential, difficult for large
firms to serve and appropriate to the resources of the firm.
(d) Specialist Focus Strategy: A runner-up firm can employ specialist focus strategy to
build competitive advantage through leadership in a specific area or product or technology.
(e) Content-Follower Strategy: The firms that follow the paths of market leaders are
content-followers. They simply imitate what the leaders do. They don’t challenge the leaders
rather follow them. They don’t imitate any trend-setting moves. They react and respond to the
leaders ‘actions. They are defensive, never offensive. In Dhaka city, the homemade bread
marketers are generally content-followers.

Matching Strategy in Weak Firms:

The firms that are competitively weak or plagued by crisis conditions may follow any of the
following strategies:
 Turnaround Strategy: Weak firms may launch an offensive turnaround strategy to
improve their market position. Before formulating this strategy, managers need to
identify the causes of poor performance of the company. There can be a wide array of
causes such as high costs, resources constraints, inefficiency and ineffectiveness of
managers/employees, debt-burden, weak economy of the country, inappropriately
implemented strategies in the past or natural disaster.
 Defensive Strategy: Some weak companies use ‘fortify and defend’ strategy to
protect their current market positions. The objectives of this strategy are to keep the
sales volume at current level, maintain the present market share, sustain the existing
profitability and protect the current competitive position.
 Liquidation Strategy: When turnaround or defensive strategy is not pragmatic or
due to reasons beyond the control of the management, it is better to go for closing the
business and liquidate the assets. Such a strategy is the last resort when hopeless
situations prevail in the company.
 End-Game Strategy: Weak companies also can employ end-game strategies. Such
strategies entail undertaking actions to maximize short-term cash flows and gradually
to exit the market. An end-game strategy is suitable under certain situation.

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Question: 3. d): Make a comparison between offensive strategy and defensive strategy.
Mention the advantages and disadvantages of first-mover strategy.

Answer: Comparison between offensive strategy and defensive strategy

Offensive strategy Defensive strategy

1. An offensive strategy consists of a 1. A defensive strategy consists of a
company’s actions directed against the company’s actions directed for protecting its
market leaders to secure competitive competitive advantage.
advantage.
2. Increasing expenditures for marketing
2. Relentless (persistent) pursuit of promotion and better customer service to
continuous improvement of products. outcompete the competitors.
3. Continuous innovation for introducing 3. Introducing more product versions
new or better products.
4. Adding unique features in the products. 4. Adding customized services that have
personal touch of the provider.
5. Reducing operating costs. 5. Making enough investments for
technology development.
6. Devising ways to attract the customers or 6. Making product quality attractive to
runner-up firms. customers.

The advantages of first-mover strategy:

 build reputation in the marketplace;
 attract buyers to the products and the firm;
 produce an absolute cost advantage over the competitors because of its early
commitments to supplies of raw materials, new technologies and distribution
channels’
 create a pool of loyal customers who are likely to repeat purchasers of products of the
firm; and
 Discourage potential new entrants to refrain from entering into the market.

The disadvantages of first-mover strategy:

 It is highly costly to become the first-mover, because the firm has to create demand in
the market for the product and so it needs to spend huge amount of money for
promotion.
 It may invite serious adverse effects on operations of the firm if the industry is such
that there are frequent changes in technology, such as in the software industry or in
the communications industry. In such a situation, the late-movers gain the advantage
of using latest technology.
 The late-movers can copy/imitate the technical-how easily and eventually may be able
to oust the first-mover from the market.
 The late-movers may become so powerful because of their ability to bypass the first-
mover in developing skills and technology that they can snatch-away the customers of
the first-mover.

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Question: 4. a): Define strategy and strategic management. What are the subject
matters strategy deals with? Why strategy is important for organizations?

Answer: Definitions of strategy : An elaborate and systematic plan of action. It’s the
competitive moves and business approaches used by managers to run the company. Johnson
and Schools (Exploring Corporate Strategy) define strategy as follows: "Strategy is the
direction and scope of an organization over the long-term: which achieves advantage for the
organization through its configuration of resources within a challenging environment, to meet
the needs of markets and to fulfill stakeholder expectations".

Strategic Management: A set of managerial decisions and actions that determines the long-
run performance of a corporation. It includes the following issues-
 Internal and external environment scanning
 Strategy formulation
 Strategy implementation
 Evaluation and control
Strategic management involves setting objectives, analyzing the competitive environment,
analyzing the internal organization, evaluating strategies, and ensuring
that management rolls out the strategies across the organization.

The subject matters strategy deals with:

Direction, market, advantages, resources, environment and stakeholders
 Where is the business trying to get to in the long-term (direction)
 Which markets should a business compete in and what kinds of activities are involved in
such markets? (markets; scope)
 How can the business perform better than the competition in those markets?
(Advantage)?
 What resources (skills, assets, finance, relationships, technical competence, and
facilities) are required in order to be able to compete? (Resources)?
 What external, environmental factors affect the businesses' ability to compete?
(Environment)?
 What are the values and expectations of those who have power in and around the
business? (Stakeholders)

Importance of Strategy for Organizations:

 Providing better guidance to the entire organization.
 Creating a more proactive management posture.
 Improved understanding of a rapidly changing environment
 Achieves a match between the organization’s environment & its strategy, structure and
processes
 Improved organizational performance
 Strategic thinking & Organizational learning

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Question: 4. b): Graphically explain the basic elements/ steps of strategic management
model.

Answer: It deals with the following four elements: Environmental scanning, Strategy
formulation, Strategy implementation and Evaluation and control

Environmental Scanning is the monitoring, evaluating and disseminating of information from

the external and internal environments to key people within the organization

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Strategy Formulation: the development of long-range plans for the effective management of
environmental opportunities and threats in light of organizational strengths and weaknesses
(SWOT)

 Mission- the purpose or reason for the organization’s existence

 Vision- describes what the organization would like to become
 Objectives- the end results of planned activity
 Strategies- form a comprehensive master plan that states how the corporation will
achieve its mission and objectives. It is Corporate, Business and Functional strategies
 Policies- the broad guidelines for decision making that links the formulation of a
strategy with its implementation

Strategy implementation: the process by which strategies and policies are put into action
through the development of:
 Programs
 Budgets
 Procedures

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Evaluation and control: the process in which corporate activities and performance results are
monitored so that actual performance can be compared to desired performance
 Performance: the end result of organizational activities
 Feedback/Learning Process: revise or correct decisions based on performance

Question: 4. c): Mention the benefits of strategic management. Explain the strategic
decision making process.

Answer: Benefits of Strategic Management

 Providing better guidance to the entire organization.
 Making manager more alert to the winds of change, new opportunities and threatening
developments in the organization’s external environment.
 Providing managers with a rationale for evaluating competing budget requests for
investment capital and new employees
 Helping to unify the numerous strategy-related decisions by managers across the
organization
 Creating a more proactive management posture.
 Clearer sense of strategic vision for the firm
 Sharper focus on what is strategically important
 Improved understanding of a rapidly changing environment
 Additional Benefits of Strategic Management:
 Improved organizational performance
 Achieves a match between the organization’s environment and its strategy, structure
and processes
 Important in unstable environments
 Strategic thinking
 Organizational learning

The strategic decision making process:

 Evaluate current performance results

 Review corporate governance
 Scan and assess the external environment
 Scan and assess the internal corporate environment
 Analyze strategic (SWOT) factors
 Generate, evaluate and select the best alternative strategy
 Implement selected strategies
 Evaluate implemented strategies

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Question: 4. d): What the company strategy look for? What are the challenges faces by
organization to set their strategy?

Answer: Understanding a company’s strategy-What to look for:

Challenges/ Complexity of Strategic Management:

Strategic Management is the process through which managers undertake efforts to ensure
long-term adaptation of their organization to its environment. It is not a simple process, it is
complex in nature. Its complexity may be attributed mainly to three reasons:
 Strategic Management involves taking decisions about future. As future is uncertain,
it is impossible to a manager to be sure about future. Therefore, Strategic
Management involves a high degree of uncertainty.
 Managers in different departments in an organization have different priorities. They
must reach an agreement to ensure an integrated approach. Strategic Management
needs an integrated approach which is difficult to achieve.
 Strategic Management involves different changes in the organization. It needs
changes in organizational cultures, leadership, organizational structure, reward
system, etc. all this make strategic management complex.

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