Southeast University

Final Exam Assignment

Course Title: Strategic Management

Course Code: MGT 687

Submitted To

Prof. Dr. Md. Serajul Islam

Dean

Southeast Business School

Southeast University

Submitted By

Name: Niaz Ahmed

ID: 2020210004011

Program: MBA

Sec: 01

Batch: 37 th

Submission Date: 13/06/202

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 Answer to the question no.-01

Two of the most vital stages of a strategic management process are strategy formulation and
strategy implementation. In strategy formulation, various strategies are developed and the
most appropriate one is then selected so that the goals and objectives of the organization can
be accomplished. On the other hand, when the strategy is actually put into action, the process
is known as strategy implementation. In other words, strategy formulation pertains to the
development of plans, while strategy implementation pertains to the application of those plans.

Both formulation and implementation of a strategy are important. After completing the phase
of strategy formulation, the next stage is the strategy execution in strategic organization in
which hypothetical work is changed into practice. To produce efficient business performance,
the strategies and strategies should be changed into individual actions. Without a doubt if one
does not implement a strategy, then it is like formulation has never occurred. Strategy
formulation includes planning and decision-making involved in developing the businesses
organization’s strategic goals and plans. Whereas, strategy implementation involves everything
related to executing the strategic plan. Strategy formulations placing the forces before action,
whereas, strategy implementation is managing those forces during the action. Intuitive and
analytical skills are mainly required for strategy formulation. On the other hand, strategy
implementation essentially requires motivational skills as well as leadership skills to coordinate
several people to work towards the same goal.

For the formulation of strategies, a significant amount of money and efforts are invested. With
the implementation functions, this investment is justified. Whether the formulated strategy is
appropriate or not, can be judged only by its implementation. It the objectives are achieved
properly then it can be said that the strategy formulation task has been done correctly.

It helps identify the loopholes in strategy formulation. Only the proper implementation of
strategy can ensure correct identification of mistakes and lapses. Implementation of strategy
guides the strategic manager to initiate corrective measures. Good strategy and good strategy
implementation and execution are the most trustworthy signs of good management. So,
strategy implementation helps measure management’s efficiency of an organization. Good
strategy plays an important role in increasing the competitive capabilities of an organization.
This can be ensured only by the effective implementation of a strategy.

So, there are the various reasons for which strategy implementation is important than
formulation of strategy.

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 Answer to the question no.-04(a)

An emerging industry is an industry which is at its early stage of development. It is an

embryonic or infant industry. It is just beginning to develop or emerge. An emerging industry is
characterized by few competitors, high growth potential, the uncertainty of demand, the
dominance of proprietary technology, wide differences in product quality, low entry barriers,
difficulty in having ample supply of raw materials and so on.

Answer to the question no.-04(b)

Below explain two of the strategies that can be applied in an emerging industry-

1. Low-cost strategy is viable to discourage potential competitors to enter into the industry.
Even company can use price-cuts to attract the price-sensitive buyers. A company strategy of
selling its products at a price lower than its competitors is known as a cost leadership strategy.
The emphasis is placed on the production of standardized products at a low per-unit cost for
price-sensitive customers. Charging lower price becomes possible when the company can
ensure post-reduction by operating business in a highly cost-effective manner.

The strategic target of this strategy is a broad section of the, market where the company offers
economical prices the company emphasizes cost reduction without reducing quality. Some
widely known companies that employ low-cost strategy include Whirlpool and general
electronic company in home appliances, Black and Decker in power tools, and more.

The key to sustaining low-cost strategies to manage costs down in every area of the company’s
business. The goal of this study is to outperform competitors through low-cost leadership.
When a company becomes a low-cost leader it is likely to earn above-average profits.

2. Differentiation strategies may be adopted based on technological or product superiority.

Differentiation strategy is concerned with product differentiation. It refers to making a
company’s product different from the similar products of the competitors.

According to Philip Kotler, differentiation is the act of designing a set of meaningful differences
to distinguish the company’s offerings from competitors’ offerings. A differentiated product is
unique by itself. A product can be differentiated based on its form, shape, quality, durability,

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reliability, repair ability, style, design, or some other features of the product. A product will
become differentiated from that of the competitors if its form size, shape, or physical structure
is changed.

For example, Tanin plastic products can differentiate its round-shape plastic tea-table by
changing its shape to square- size or oval-shape. ‘Red Leaf marker pen may be differentiated by
making it transparent.

Features of a product such as the exterior finish of a car, fragrance of perfume powder or color
of toothpaste can be the themes for product differentiation. Performance quality low, average,
high, or superior quality in terms of using the product for a particular purpose can be used as
the basis of product differentiation. A company may set its products at a high-quality range and
gradually switch down to average or low quality or switch up to superior quality.

Answer to the question no.-05(a)

Economies of scale are cost reductions that occur when companies increase production. The
fixed costs, like administration, are spread over more units of production. Sometimes the
company can negotiate to lower its variable costs as well. Governments, non-profits, and even
individuals can also benefit from economies of scale. It occurs whenever an entity produces
more, becomes more efficient, and lowers costs as a result. Economies of scale not only benefit
the organization. Consumers can enjoy lower prices. The economy grows as lower prices
stimulate increased demand. Economies of scale give a competitive advantage to large entities
over smaller ones. The larger the business, non-profit, or government, the lower its per-unit
costs.

It reduces the per-unit fixed cost. As a result of increased production, the fixed cost gets spread
over more output than before.

It reduces per-unit variable costs. This occurs as the expanded scale of production increases the
efficiency of the production process.

Example of Economic scale-

 Discounts on bulk purchases of raw materials needed to create a company's products.

 Investments in technology that, over time, pay for themselves by improving a
company’s rate and cost of production.

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 Answer to the question no.-05(b)

Learning-curve effect describes that each doubling of the accumulated amount of production
reduces the production unit costs.

The learning curve also called the progress function and start-up function shows that
manufacturing costs fall as volume rises. It has typically been developed for standardized
products like airframes and cameras. The experience curve traces declines in the total costs of a
product line over extended periods of time as volume grows. Typically, it includes a broader
range of costs that are expected to drop than does the learning curve, but disregards any
product or process design changes introduced during the period of consideration. Gas ranges
and facial tissues are two major product lines on which experience curves have been
developed.

Price is a basis for competition.

If per unit cost is reduced, price may be reduced, which may lead to increased market share.

As cumulative output increases, the firm's average cost is reduced. Therefore, for any
production rate, there is a reduction in the per-unit cost.

If market share is increased, profits will increase.

For example, imagine you've just started a new job. At first the company will need to spend
time training you, and you'll need some time to get used to the new tasks you are responsible
for. However after this initial period of high cost and low output you will have the experience
necessary to perform the same tasks faster and better.

Answer to the question no.-06(a)

Outsourcing: Outsourcing is the practice of passing individual tasks, subareas, or business

processes over to a third-party and thereby receiving the results from outside of your own
company. Services that your company was responsible for fulfilling will now be provided by a
specialized service provider. These tasks are often a business’s secondary functions: tasks that
must be fulfilled in order for a company to focus on its central activity.

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 Answer to the question no.-06(b)

There are many advantages of vertical integration that can help your company increase its
competitiveness and profitability in the marketplace:

Establishing independence: When your company owns the suppliers in the production chain,
then you're no longer dependent on the whims and needs of other organizations. Instead, you
control every aspect of the supply chain from the cost of materials to production practices to
the timing of shipping and production. Usually, this independence from relying on others
increases efficiency and productivity.

Controlling costs: When you own all the companies in the supply chain, you're able to set costs
much lower than you would if you were working with separate companies. These cost savings
often translate into lower prices for customers and higher profits for the company overall.

Creating economies of scale: An economy of scale is the reduction in cost to create a product
as the facilities in which the product is made grow in size. When you control every step in
production, you're able to scale the size and cost of your operation to meet your business's
needs.

Increasing knowledge: When working with a supplier, it can be a challenge to know exactly
how their company functions and the details of their production practices. As an owner, you
gain knowledge and insights about every niche step in the production process and can apply
that knowledge to help create a superior product.

Improving marketability: With increased knowledge of your production and supply chain, you
can maximize your marketing efforts. You can comfortably refer to any stage in your production
process and use any unique competitive selling points to help establish your product in the
marketplace.

Maximizing market control: Usually, very large companies and corporations have the capital
and structure to acquire the companies along their supply chain. When they do so, they often
cut off competitors' access to certain materials or resources, giving the vertically integrated
company larger control of the overall market.

Lowering prices: Vertically integrated companies can offer their products at a much lower price
than companies that must pay every organization in their supply chain for their work. Lower
prices often increase demand, leading to better brand recognition amongst consumers and
higher profits for the parent company.