Q1. What are the characteristics of strategic management?

Explain how strategic management is

different from operational management?

Answer: The characteristics of strategic management are as follows:

1. Provides Direction:

Strategic management provides the much-needed direction to a business firm. This direction
gives guidance in preparing the business firm's vision, mission, goals, and objectives. Due to this,
the firm's efforts become well directed in achieving its specific objectives.

2. Continuous Process:

It is a continuous process. It means that strategy formulation is to be done constantly due to the
ever-changing environmental factors.

3. Constantly Changing:

There are several external environmental and internal environmental factors around a business
firm that are constantly changing. Strategic management helps to identify these factors and
formulate strategies to counter these factors.

4. Obtains Inputs from all Departments:

It obtains inputs from all business departments and integrates formulating strategies,
implementing them, and reviewing them for further modifications.

5. Proactive:

It helps management to be pro-active rather than reactive.

6. Analysis of SWOT:

Strategic Management makes SWOT analysis possible as analyzing one's strengths enables
opportunities to be explored. Similarly, when weaknesses are identified, efforts can be made to
overcome them.

Strategic Management Operational Management

This is an organizational-wide activity where the This is concerned with operations in the
operations, sales, and finance are concerned from organization's production function at its
the top to the organization's bottom level. operations/ manufacturing floor level.

A long-term process identifies the long-term
desired level of performance and tries to achieve
it.
Involves non-routinized tasks, which is very
ambiguous and dynamic.
A complex process that requires heavy
management skills to handle.
It is directly linked to the strategic management
process as it manages an organization's critical
success factors to optimize performance.
A short-term process focused on handling the day-
to-day operations of an entity.
Involves day-to-day business activities, which is
very routinized and mechanical and does not
involve any ambiguity.
A relatively straightforward process and that a
manager with average skills can handle.
It is not directly related to the organization's
survival. Instead, it indirectly influences survival
through cumulative performance on a day-to-day
basis.
Q.2 Explain the meaning & attributes of strategic intent. Explain the elements of strategic intent
with examples.

Answer: Strategic Intent of a business organization is the organization's intention in moving in a

particular direction. A business organization has to decide the order in which it wants to go.

Strategic intent thus defines the intention of an organization. It includes drafting the vision and
mission statements, determining the organization's goals and objectives, and fixing its short-term
and long-term objectives. Thus strategic intent is an essential aspect of strategic management, and
considerable time and thought are devoted to improving the strategic intent. Strategic intent
provides direction to the organization.

The three attributes of strategic intent are as follows:

1. Sense of direction: It implies a view of the future, i.e., the long-term market and competitive
position the company hopes to build.
2. Sense of discovery: It is a differentiated and unique point of view about the future.
3. Sense of destiny: It is the perception that the goal is worthwhile.

The following are common elements of strategic intent:

 Mission: The reason an organization exists. For example, generate sustainable

renewable energy solutions to cover every community and industry's energy demand
worldwide.
 Vision: It describes the vision for an organization's future, i.e., a distant target that serves as
an inspiration and long-term direction. For example, an energy company with a vision of a
world that runs on clean energy.
 Goals: Goals are results that an organization plans to achieve. For example, an energy
company that plans 5GW of new solar capacity with three years.
 Objectives: These are the meaningful steps on the path to achieving goals. For example, an
energy company that plans to test a new battery system.
 Plans: Plans are steps to achieve the objectives. For example, a plan that outlines the
hundreds of steps involved in testing a new battery system.

Q3. Explain the BCG matrix. Compare BCG matrix with GE 9 cell model.

Answer: BCG Matrix, otherwise known as the 'Boston Consulting Group growth-share
matrix,'  represents its investment portfolio.

It is based on two factors which are:

1. The growth rate of the product market.

2. Market share held by the company in the respective market in comparison to its
competitors.

BCG Matrix helps the corporation analyze the product lines or business units, prioritize them, and
allocate resources. The model aims at identifying the problem of resource deployment among
different business segments.

In this approach, various businesses of a company are classified on a two-dimensional grid.

  The vertical axis shows the market growth rate, which is a measure of how attractive the
market is?
 The horizontal axis indicates relative market shares, which shows how strong the company's
position is?

The fundamental differences between BCG and GE matrices:

 BCG matrix can be understood as the growth-share model, reflecting the growth of business
and its market share. On the other hand, the GE matrix is also termed a multifactor portfolio
matrix, which companies use to make strategic choices for product lines or business units
based on their grid position.
 BCG matrix is more straightforward compared to GE matrix, as the former is easy to draw
and consists of only four cells, while the latter consists of nine cells.
 The two dimensions on which the BCG matrix is based are market growth and market share.
Conversely, industry attractiveness and business strengths are two factors of the GE matrix.
 The companies use the BCG matrix to deploy their resources among various business units.
On the contrary, firms use the GE matrix to prioritize investment among different business
units.
 In the BCG matrix, only a single measure is used, whereas multiple measures are used in the
GE matrix.
 BCG matrix represents two degrees of market growth and market share, i.e., high and low. In
contrast, three degrees of business strength are described in the GE matrix, i.e., strong,
average, weak, and industry attractiveness, are high, medium, and low.

Q4. What are the generic competitive strategies?

Answer: Competitive strategies are how a company seeks to secure its competitive advantage over
competitors and compete in the marketplace.

According to Michael E. Porter, the three generic competitive strategies are distinguished:

1. Cost leadership

The cost leadership strategy aims to gain a comprehensive cost advantage within the industry,
thereby offering products below the usual market price. It is trying to gain market share by
addressing cost-conscious and price-sensitive buyers. Through the consistent use of economies of
scale and branded products' renunciation, a company can maintain its image as the most cost-
effective supplier for years.

2. Differentiation strategy

The differentiation strategy offers products that are considered unique in the industry, for which
customers are willing to pay higher prices. Instead of cost leadership, therefore, quality leadership is
sought. For such a strategy to work, the feature must be hard to copy and imitate for competitors.

An excellent example of this strategy's successful application is Apple. They continue to set new
trends with their innovative products and have a loyal and strong buying fan base that genuinely
reveres the brand.
 3. Concentration strategy

The concentration strategy differs from the previous two in that it serves the entire market but only
a specific market segment. This can be a particular consumer group, product group, or geographic
region. Start-ups often use the concentration strategy. The idea is that a company can operate more
effectively and efficiently by focusing on a niche than a rival company that is more competitive.
Within the market segment, in turn, cost leadership may be sought, or differentiation strategies
pursued.

Q5. Discuss Mc Kinsey's 7s framework. Explain how the model is useful in strategy formulation and
also in the implementation of the strategy.

Answer: The McKinsey 7S Model refers to a tool that analyzes a company's "organizational design."
The model's goal is to depict how effectiveness can be achieved in an organization through the
interactions of seven key elements – Structure, Strategy, Skill, System, Shared Values, Style, and
Staff.

1. Structure: Structure is how a company is an organized – chain of command and accountability

relationships that form its organizational chart.

2. Strategy: Strategy refers to a well-curated business plan that allows the company to formulate a
plan of action to achieve a sustainable competitive advantage, reinforced by its mission and values.

3. Systems: Systems entail the company's business and technical infrastructure that establishes
workflows and the chain of decision-making.

4. Skills: Skills form the company's capabilities and competencies that enable its employees to
achieve its objectives.

5. Style: The attitude of senior employees in a company establishes a code of conduct through their
interactions and symbolic decision-making, forming its leaders' management style. 

6. Staff: Staff involves talent management and all human resources related to company decisions,
such as training, recruiting, and rewards systems

7. Shared Values: The mission, objectives, and values form the foundation of every organization and
play an essential role in aligning all key elements to maintain a good organizational design.

Strategy Formulation and Implementation

The model helps strategy formulation and implementation by following a top-down approach –
ranging from broad strategy and shared values to style and staff.

Step 1: Identify the areas that are not effectively aligned

Is there consistency in the values, strategy, structure, and systems? Look for gaps and
inconsistencies in the relationship of elements. What needs to change?

Step 2: Determine the optimal organizational design

It is vital to consolidate top management's opinions and create a generic optimal organizational
structure that will allow the company to set realistic goals and achievable objectives. The step
requires a tremendous amount of research and analysis since there are no " organizational industry
templates" to follow.

Step 3: Decide where and what changes should be made

Once the outliers are identified, the plan of action can be created, making substantial changes to the
chain of hierarchy, communication flow, and reporting relationships. It will allow the company to
achieve an efficient organizational design.

Step 4: Make the necessary changes

Implementation of the decision strategy is a make-or-break situation for the company in realistically
achieving what they set out to do. Several hurdles in the implementation process arise, which are
best dealt with by a well-thought-out implementation plan.

Q6. Discuss matrix organizational structure. Explain how strategy is matched with the structure to
achieve efficient strategy implementation.

Answer: The matrix structure creates a dual chain of command, two budget authority lines, and two
performance and reward sources. The matrix's key feature is that product (or business) and
functional lines of authority are overlaid to form a matrix or grid between the product manager and
functional manager.

Matching Organization Structure to Strategy

There is no one optimal organizational design or structure for a given strategy or type of
organization. What is appropriate for one organization may not be suitable for a similar firm. The
firm's strategy must determine the choice of structure.

All of the primary organizational forms have their strategy-related strengths and weaknesses. Thus
the best organizational arrangement is the one that best fits the firm's situation at the moment.

The following five sequence procedure is a valuable guide for a fitting structure to strategy:

1. Pinpoint the essential functions and tasks necessary for successful strategy execution.
2. Reflect on how critical strategy functions and organizational units relate to routine and those
that provide staff support.
3. Make strategy critical business units and functions the main organizational building blocks.
4. Determine the degrees of authority needed to manage each organizational unit, bearing in
mind both the benefits and costs of decentralized decision-making.
5. Provide for coordination among the various organizational units.
Q7. Discuss tools of strategy evaluation and control.

Strategic evaluation and control can be defined as determining the effectiveness of a

given strategy in achieving the organizational objectives and taking corrective action wherever
required.

The tools and techniques of strategic control can be classified into the following two major groups:

(A) Strategic Momentum Control: 

These techniques aim to assure that the assumptions on whose basis strategies were formulated
are still valid and finding out what needs to be done to allow the organization to maintain its
existing strategic momentum. It includes the following techniques:

 Responsibility control centers: In this technique, strategies are evaluated and controlled
based on revenue, expense, profit, and investment centers.
 The underlying success factors: Based on the Key Success Factors (KSFs) of an organization,
the strategists can continually evaluate and control the strategy.
 The generic strategic approach: This approach assumes that the strategies adopted by a
firm similar to another firm are comparable.

(B) Strategic Leap Control: 

This control can help organizations define the new strategic requirements and cope with
emerging environmental realities. It includes the following techniques:

 Strategic issue management:  This technique is aimed at identifying one or more strategic
issues and assessing their impact on the organization,
 Strategic field analysis:  It is a way of examining the nature and extent of synergies that exist
or lacking between an organization's components.
 System modeling: It is based on computer-based models that stimulate the organization's
essential features and environment.
 Scenarios: Scenarios are perceptions about the likely environment a firm would face in the
future.

Q8. What are the principles of the blue ocean strategy?

The principles of Blue Ocean Strategy are the six main principles that guide companies through the
formulation and execution of their Blue Ocean Strategy in a systematic risk-minimizing and
opportunity maximizing manner.  

The first four principles address Blue Ocean Strategy formulation:  

1. Reconstruct market boundaries:

This principle teaches companies how to make the competition irrelevant by looking across the six
conventional competition boundaries to open up commercially important blue oceans. The six paths
focus on looking across alternative industries, across strategic groups, across buyer groups, across
complementary product and service offerings, across the functional-emotional orientation of an
industry, and even across time.

2. Focus on the big picture, not the numbers: 

Illustrates how to design a company's strategic planning process to go beyond incremental

improvements to create value innovations. It presents an alternative to the existing strategic
planning process, often criticized as a number-crunching exercise that keeps companies locked into
making incremental improvements. This principle tackles planning risk.

3. Reach beyond existing demand:

This principle shows how to aggregate demand by focusing on the differences that separate
customers and building on the powerful commonalities across noncustomers to maximize the size of
the blue ocean being created and new demand being unlocked, minimizing scale risk.  

4. Get the strategic sequence right: 

This principle ensures companies create a leap in value to the mass of buyers and build a viable
business model to produce and maintain profitable growth. Ensuring that companies build a
business model that profits from the blue ocean they have created addresses business model risk.

The remaining two principles address the execution risks of the Blue Ocean Strategy.  

5. Overcome key organizational hurdles: 

This principle deals with organizational risk. It lays out how leaders and managers alike can surmount
the cognitive, resource, motivational, and political hurdles despite limited time and resources in
executing the blue ocean strategy.

6. Build execution into strategy:

This principle introduces what Kim & Mauborgne call a fair process. Because a blue ocean strategy
perforce represents a departure from the status quo, a fair process is required to facilitate both
strategy making and execution by mobilizing people for the voluntary cooperation needed to
execute the blue ocean strategy. It deals with management risk associated with people's attitudes
and behaviors.  

Short Notes –

1. Four Phases in Strategic Management Process

Strategic management is a process through which decision-making is done. Thus strategic

management includes the following stages:

(i) Strategic Intent: Strategic intent thus defines the intention of an organization. It
includes drafting the vision and mission statements, determining the organization's goals
 and objectives, and fixing its short-term and long-term objectives. Strategic intent
provides direction to the organization.

(ii) Strategy Formulation: The next stage in strategic management is to formulate

strategies. Strategy formulation is equally a difficult task.

For the formulation of strategy, it is necessary to study the following essential aspects:

(a) External Environmental Factors: These factors include various factors such as the
legal, political, social, cultural, demographic environmental factors prevailing around the
business organization.

(b) Internal Environmental Factors: Internal environment includes various factors such
as the availability of infrastructure, manpower, strengths, weaknesses of the
organization, etc.

(c) SWOT Analysis: A business firm has to carry on the SWOT analysis, i.e., strengths,
weaknesses, opportunities, and threats of not only its own but also of its competitors.

(iii) Implementation of Strategies:

After deciding the strategic intent and formulating strategies, the next stage is to ensure
that the strategy developed effectively is implemented. For this, various actions are
required. A business firm has to allocate resources such as workforce, money, machines,
etc., for strategy implementation. Similarly, there has to be a proper design of the
organization to ensure smooth implementation.

(iv) Evaluation of Strategies: The implementation and evaluation of strategies are to be

concurrent. It means that the evaluation of strategies should be done simultaneously
with the implementation. The fundamental objective of the evaluation is to see that the
implementation is as per the plan. If any strategy has proved to be ineffective, it can be
modified or changed suitably.

2. Environmental appraisal Scenario planning: Environmental Threat and Opportunity Profile

(ETOP)

ETOP Analysis (Environmental Threat and Opportunity Profile) is the process by which
organizations monitor their relevant environment to identify opportunities and threats affecting
their business to take strategic decisions.

It is a technique to structure the environment for fundamental business analysis. The preparation of
ETOP involves dividing the environment into different sectors and then analyzing each sector of the
organization's impact. A comprehensive ETOP requires sub-dividing each environmental sector into
sub-sectors, and then the impact of each sector is described in the form of a statement.

The advantages of ETOP are:

 Help to determine the key factor of threats and opportunities.

  A good tool to qualify the factors related to the company's strategy.
 Can consider many factors for each particular case.
 It provides a clear of which sector & subsectors have a favorable impact on the organization.
 It helps to interpret the result of environmental analysis.
 The organization can assess its competitive position.
 Appropriate strategies can be formulated to take advantage of opportunities & counter the
threat.

The disadvantages of ETOP are:

 It doesn't show the interaction between the factors.

 It can't reflect the dynamic environment.
 It's a subjective analysis tool.

3. Porter's Five Forces Model of Competition

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every
industry and helps determine an industry's weaknesses and strengths. This model can be applied to
any segment of the economy to understand the industry's level of competition and enhance a
company's long-term profitability.

Porter's five forces are:

1. Competition in the Industry

The first of the five forces refer to the number of competitors and their ability to undercut a
company. The more significant the number of competitors and the number of equivalent products
and services they offer, the lesser the company's power. Conversely, when competitive rivalry is low,
a company can charge higher prices and set deals to achieve higher sales and profits.

2. Potential of New Entrants into an Industry

A company's power is also affected by the force of new entrants into its market. The less time and
money it cost for a competitor to enter a company's market and be an effective competitor, the
more an established company's position could be significantly weakened. 

3. Power of Suppliers

The next factor in the five forces model addresses how easily suppliers can drive up the inputs' cost.
It is affected by the number of suppliers of critical inputs of a good or service, how unique these
inputs are, and how much it would cost a company to switch to another supplier. The fewer
suppliers to the industry, the more a company would depend on a supplier.

4. Power of Customers

Customers' ability to drive prices lower or their level of power is one of the five forces. It is affected
by how many buyers or customers a company has, how significant each customer is, and how much
it would cost a company to find new customers or markets for its output.  A smaller and more
powerful client base means that each customer has more power to negotiate for lower prices and
better deals. 

5. Threat of Substitutes
The last of the five forces focus on substitutes. Substitute goods or services that can be used in a
company's products or services pose a threat. Companies that produce goods or services for which
there are no close substitutes will have more power to increase prices and lock in favorable terms.
When close substitutes are available, customers will have the option to forgo buying a company's
product, thereby weakening its power in the market.

4. Virtual Value Chain

The value chain is a model that describes a series of value-adding activities connecting a
company's supply side (raw materials, inbound logistics, and production processes) with its demand
side (outbound logistics, marketing, and sales).

The components of a virtual value chain are as follows:

 Gather: The information age has helped the digitization of information. The proliferation of
data is higher than ever before. The internet provides data and information about markets,
economies, government policies, etc. Companies gather information relevant to them as a
first stage in the virtual value chain.

 Organizing: Information gathered in the first stage of the virtual value chain is in text, data
tables, video, etc. The second stage's challenge is to organize the gathered information to
retrieve it easily for further analysis.

 Selection: In the third stage of the virtual value chain, organizations analyze captured
information to add value to customers. Organizations develop better ways of dealing with
customers, product delivery, etc., using information.

 Synthesization: In the fourth stage of the virtual value chain, organizations synthesize the
available data. The data reaches the end-user in the desired format.

 Distribution: The last stage of the virtual value chain is the delivery of information to the
end-user. In a physical value chain, products are delivered to customers. In the virtual value
chain, a digital product replaces this. 

5. Meaning of Triple Bottom Line

Triple Bottom Line (TBL), in economics, believes that companies should commit to focusing as much
on social and environmental concerns as they do on profits. TBL theory posits that instead of one
bottom line, there should be three: profit, people, and the planet.

The idea was coined as "triple bottom line" as a company should be managed to make money and
improve people's lives and the planet.

Its framework advances the goal of sustainability in business practices, in which companies look
beyond profits to include social and environmental issues to measure the total cost of doing
business.
TBL theory also says that if a company focuses on finances only and does not   examine how it
interacts socially, it cannot see the whole picture, so it cannot account for the total cost of doing
business.

People + Planet = Social + Environmental Responsibility

According to TBL theory, companies should be working simultaneously on these three bottom lines:

Profit: This is the traditional corporate profit measure—the profit and loss (P&L) account.

People: This measures how socially responsible an organization has been throughout its history.

Planet: This measures how environmentally responsible a firm has been.